Giving a serious blow to the ailing natural rubber (NR) mart, India’s NR consumption slid further, heading into a negative growth for the present fiscal. Consumption grew just 0.03 per cent growth at 7.87 million tonnes during April-February period of 2008-09.
During the April - January period of the same fiscal, consumption registered a 1.8 per cent growth while this was 5 per cent in April - February period of 2007-08. This is a clear indication of the low offtake by the tyre manufacturing sector owing to the current slowdown in the sales of automotive tyres.
Adding much woes to growers total production in April - February period registered 4.2 per cent growth while this was on the negative (-4 per cent) in the same period of last financial year. Total production rose to 810,505 tonne against 778,095 tonne in April - February of 2007-08.
The poor growth in consumption, coupled with an upsurge in production naturally led to a heavy carryover stock. This may lead to the plummeting of prices once the summer season is over. The market is currently on a slightly upward movement as RSS-4 grade quoted Rs 73-74 per kg.
This is due to a low production, thanks to extreme summer heat.
According to the latest estimates of Rubber Board the overall stock by the end of February was 224,600 tonne which is one of the highest stocks in recent times, against 198,000 tonne in February, 2008. There is a diametrically opposite correlation between the stock and prices in natural rubber market.
Whenever the stock is over 200,000 tonne the market is on a strong bearish mode. The price for RSS-4 had been crashed below Rs 50 per Kg when stock increased to 250,000 tonne, few years back. So the low consumption and huge stock creates a panic like situation among growers about the future of the market.
The set back has been serious on the export front too as total shipment in February was just 2000 tonne against 14,643 tonne in the same month of last year. Total export in April - February period also dropped to 44,149 tonne against 47,277 tonne.
There is Good news from the import sector as import decreased by over 50 per cent in February. February import was 2,100 tonne against 4,738 tonne in the same month of 2008. Cumulative import till February was 73,530 tonne against 82,116 tonne according to Rubber Board’s estimates.
Source : Business Standard