Natural rubber prices rise to 3-year high on supply constraints

Natural rubber prices recorded its highest rates in the last three years, reaching ₹191 per kg in the Kottayam market. It was in December 2021, the prices of the commodity breached the ₹190 mark, traders said.

They attributed the reasons for the northward price movement to supply constraints, extended summer followed by unexpected rains that led to disrupted and delayed production.

George Valy, President, Indian Rubber Dealers Federation, said heavy downpours in growing regions have affected the quality of rubber sheets and it necessitated re-smoking the material to make it sales-ready. The sudden and unexpected rains are also hindering rain guarding activities in plantations to make the trees ready for tapping in the monsoon period.

However, extreme rains in the last couple of weeks have made it difficult for ground-clearing works in rubber plantations and the production will likely be hit as a result . It requires sunny days at least for a week to complete rain guarding works, he said.

Same situation elsewhere

The situation was similar in other natural rubber-growing countries as well with prices touching the roof due to unfavourable weather conditions such as extreme heat and heavy downpour.

Jom Jacob, industry analyst, said the market arrivals of primary forms of natural rubber (cup-lump, fresh latex and unsmoked sheet) remain abnormally low in the various local markets across South-East Asia. The supply in the major producing countries in South-East Asia has abnormally been affected hit by rain-induced harvesting disruptions and a number of other factors. One major factor behind the abnormally low supply is the large-scale crop-shift from rubber to oil palm and durian in the world’s first two largest producing countries such as Thailand and Indonesia.

Shipping delays

Meanwhile, there are reports of shipping delays hitting import consignments such as natural rubber to India due to congestion at South-East Asian ports.

Rajiv Budhraja, Director General, Automotive Tyre Manufacturers Association (ATMA), told businessline that geo-political issues have become a norm often leading to disruption in imports and exports. Over the years, the tyre Industry has been trying to factor in these issues and find viable alternatives so that manufacturing remains largely impervious to such changing scenarios. The shipping challenge in Far East due to container shortage might lead to some delays but industry seems poised to meet the challenge so far.

Binu KS, President, Kerala Steamer Agents Association, said the congestion has now reached from the Middle-East to the Far-East, including Singapore, Malaysia, Thailand and Vietnam, hitting export and import and transhipment cargoes. Besides, the present cyclonic threat is also leading to vessel delays at Colombo Port as well. All these issues are likely to hit both export and import movement to and from India.

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