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RUBBER NEWS INDIA - Crude price rise make synthetic rubber unattractive
(Last Updated: 07 Jun 2018)

 

Crude price rise make synthetic rubber unattractive; boosts natural rubber prices

Natural rubber prices in India had reached an all-time high at Rs 243 per kilo in 2011 when the global crude oil averaged above 100$/barrel.

Published: 10th May 2018 06:09 PM  |   Last Updated: 10th May 2018 07:38 PM  |  A+A-

Image used for representational purpose.

Express News Service

KOCHI: With the crude oil prices slowly inching towards $80/barrel, the synthetic rubber is becoming less attractive for rubber-based industries including tyre makers, boosting the prices of natural rubber (NR).

NR prices shot past Rs 120/kg recently as crude touched the highest price since 2014. Natural rubber prices in India had reached an all-time high at Rs 243 per kilo in 2011 when the global crude oil averaged above 100$/barrel. Since then, NR prices has been on a downward spiral, hitting a low of Rs 95/kg in 2015.

The USA's withdrawal from the Iran nuclear deal is set to drive up crude oil prices even further. The global NR prices have touched Rs 118 per kilo today, while its domestic counterpart is trading at Rs 122/kg for the RSS-4 variety.

"It's widely observed that the demand for NR pick up as crude oil and corresponding synthetic rubber prices go up," said N M Mathew, vice chairman, Indian Rubber Institute. He added that despite the incoming monsoons, domestic production will pick up once NR prices register a significant growth.

Commenting on other factors that affect the NR price, N Rajagopal, secretary-in-charge, Rubber Board India, said that demand for NR from China and currency exchange rates play a prominent role in determining the price of NR.

China is the largest consumer of NR, consuming close to 40 per cent of the total global production. With decades of fast-paced growth led by exports, the global recession had forced the Chinese economy to transition more into a domestic consumption-led economy. This had resulted in a slowdown and depleting demand, which is now stabilizing with the economy posting a stable growth rate in the last few quarters, experts said.

The drop in the value of rupee against the dollar might also help domestic NR prices to pick up as imports become less attractive. The rupee breached 67/dollar on Wednesday, which is a 15-month low. As global rubber prices are rising,

Indian manufacturers will be forced to turn to domestic producers to fulfill their demand, which in turn will benefit the local rubber farmers. However, block rubber from east Asian markets still trades Rs 25-30 cheaper per kilo when compared to domestic sheet rubber varieties. Block rubber constitutes about 70 per cent of the rubber imported by the tyre-manufacturing companies in India.

Siby Moniapally, secretary, Indian Rubber Growers Association, said that with the USA, the world's largest economy posting robust economic growth figures, we expect a growing demand for consumables like automobiles. He reiterated the fact that with the crude oil prices rising, synthetic rubber is becoming lesser attractive for manufacturers, thus making NR more attractive. 

The high growth rate of Indian economy has resulted in record demand for NR in the past few years with consumption crossing well over 10 lakh tonnes. Sadly, with global NR prices staying lower than domestic supply, imports have been flooding the market.

Commenting on the rubber grower's plight, Thomson M, a resident of Waynad, says anything lower than Rs 120 per kilo makes it difficult to meet the cost of production. He added that the govt's support price of Rs 150 per kilo is often delayed by months, making it hard for farmers to sustain themselves.

With the global GDP growing 3.8 percent last year, its strongest year since 2011, there is hope for global demand picking up further to result in a possible NR price hike. Actions like the East-Asian countries' (Thailand, Indonesia and Malaysia) efforts to limit exports of NR earlier this year can further boost the global NR prices.

 

 

 

Stop rubber dumping; set import price, says industry

 
 
 
 

Growers should be allowed to tap market potential

KOCHI, MAY 21

 

Minimum import price on rubber is needed to avoid dumping, say stakeholders citing a serious drop in production triggered by imports and low prices.

Quoting data at a meeting of a Task Force in Kochi, growers and processors pointed out that imports were increasing even during high cropping months of September-February, This underlines the need for a clear policy on how much, when and what to import. “It is not only the quantum of imports, but also timing that created the problem”, they said. Rubber Board figures also revealed that imports had grown 10 per cent to an all time high of 469,433 tonnes 2017-18 due to favourable price , rising consumption and less than expected production.

 

Santhosh Kumar, Senior VP, Harrisons Malayalam Ltd, who participated in the meeting told Business Line that they have strongly argued for a minimum import price for rubber along the lines for pepper. The price of domestic rubber should not be less than the cost of production, which is now hovering at 170/kg. There was also demand to utilise the import duty collected for supporting rubber cultivation by extending price support and replanting subsidies. Currently 40 per cent of the Indian consumption is being imported and further imports would adversely affect the growers’ interests.

 

Admitting that rubber imports had been consistently increasing from 2008-09 to 2017-18, Rubber Board Chairman and Executive Director, MK Shanmuga Sundaram said at a different function that imports are projected at 450,000 tonnes in 2018-19. The production during January-March 2018 was 10 per cent lower mainly on account of intermittent rains and relatively low rubber prices. The projected NR production is considerably lower as compared to the production potential, he said addressing the 176th meeting of the Rubber Board. However, the production in 2018-19 is projected at 730,000 tonnes with a growth of 5.2 per cent while consumption is projected at 1.2 million tonnes , with an increase of 8 per cent, he added.

According to Ajith B.K., Secretary, of Association of Planters of Kerala, imports should be allowed to fill the gap between the domestic consumption and production. But the government should impose safe guard duty to protect the interest of growers.

There should be a separate Ministry for plantation crops like other South East Asian nations and the Task Force should initiate a “Grow in India” campaign.

 
BL Published on May 21, 2018

 

 

 

 

Prospects of rubber industry ignored: Cochin chamber

May 15, 2018

‘State grappling with fall in prices of cash crops’

The Cochin Chamber of Commerce and Industry has expressed concern at the way product district clusters have been listed ignoring the prospects of the  in the State.

A petition forwarded to the Commerce Ministry by the chamber said: “The chamber is concerned at the way Kerala has been ignored in the preparation of the product district clusters for export promotion.

In the recently released draft agricultural policy, the Union Ministry of Commerce had constituted a list of 50 district product clusters for export promotion, and it is disappointing that of these only pineapple and ginger have been recommended from Kerala.”

The chamber expressed “surprise” at the way Kerala was ignored in the rubber products district cluster despite being at the forefront of  production. At the same time, three districts from Tripura have been included in the list.

 

These developments have come in the backdrop of crops in Kerala facing a serious crisis.

There has been a steep fall in the prices of cash crops like pepper, cardamom, rubber, cocoa, nutmeg, and areca nut, the chamber pointed out.

The petition also pointed out that the contribution of the farm sector to the State’s economy was on the slide with negative growth in recent years.

The share of agriculture and allied sectors in the State gross domestic production (GDP) has also declined from 13.38% in 2011-12 to 11.48% in 2014-15 and to 10.38% in 2015-16.

The chamber appreciated the State government for writing to the Union Commerce Minister seeking to consider Kerala districts for clusters of rubber products even as the chamber, one of the oldest trade organisation in the State, urged the Union government to include the districts in the natural rubber products cluster.

 

What’s behind the fall in rubber prices

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Lower global demand, higher domestic production put the brake on rates

Unlike many commodities that have been heating up in recent times, prices of domestic natural  (RSS-4 variety) have been on a slide. The latest data available from the  Board shows that prices have cooled down to about ₹124 a kg as of February 2018, from ₹159 a year ago.

The fall is intriguing, as domestic demand has been reasonably strong during this period. As per the latest available data, a total of 8,14,060 tonnes was consumed during April-December 2017, up 4.9 per cent from the same period a year ago.

Considering that about 65 per cent of the consumption is by the auto industry for the manufacture of tyres, this is corroborated by the pick-up in demand seen in the auto sector, after being intially pulled down by the GST transition.

Overall vehicle sales grew 11.28 per cent in April-December 2017, and has seen further pick-up since then.

 

One reason for the cooling off of domestic prices could be the fall in international prices in the past one year. The global price is currently ₹110 a kg, compared with ₹184 in February 2017. For most of this period, the international price has stayed well below the domestic price, with a difference of ₹6-27.

False alarm

Towards the end of 2016-17, rubber prices did look like  would continue its up-trend as faced some supply tightness due to repeated floods in Thailand, firming up of US dollar against Asian currencies, and increased demand from . But this was not to be.

Lower demand from the US and the UK dampened prices. New car sales in the US dropped 1.8 per cent year-on-year in 2017, after seeing many years of growth.

Sale of new four-wheelers in the UK also dropped 5.7 per cent year-on-year in 2017, driven by higher taxes on diesel cars due to pollution concerns.

China’s vehicle sale growth, too, looked a little jaded after similar concerns as that of the UK. Anti-dumping duty on Chinese tyres by countries such as the US and India, also affected production in China.

However, fall in international prices did not increase imports into India. Had it happened, it could have led to further crashing of domestic prices, hurting rubber growers.

According to the latest available data, total imports for April-December 2017 stood at 3, 33,301 tonnes compared with 3,60,924 tonnes during the same period a year ago — a drop of 7.6 per cent.

The fall in imports was due to certain restrictions placed on the import of natural rubber from early 2016 onwards. The Centre mandated that natural rubber be imported only through two ports —  and Jawaharlal Nehru Port Trust (Navi ). This adds to the costs and delays of user industries which may not be located close to these two ports.

Also, with the levy of 25 per cent import duty on natural rubber, the differential between domestic and international prices was not wide enough to make imports attractive. With a price differential of 4-20 per cent, it would have even made imports costlier.

Higher domestic production, too, kept domestic prices under check.

The total output during the first three quarters of 2017-18 increased 4.4 per cent to 5,24,000 tonnes, from the same period a year ago. This has partly helped meet rising demand without leading to a spike in prices.

Outlook

According to the latest outlook given by the International Rubber Study Group in December 2017, world natural rubber demand is forecast to increase 2.4 per cent (over 2017) to 13.34 million tonnes in 2018. This is somewhat similar to the rise seen in 2017.

With international prices remaining unattractive due to a supply glut, major producers such as Thailand are taking measures to cut international supplies and prop up prices. According to reports available in public domain, Thailand plans to bring down annual supply by as much as 1 million tonnes to 3.3 million tonnes, before the end of 2018. Besides, Thailand, Indonesia and Malaysia — the three largest producers of natural rubber — have made an agreement to reduce exports in the first three months of 2018. They may repeat this in the coming quarters if prices don’t get the necessary boost.

These moves may buoy international prices in the months to come.

At the same time, demand for natural rubber from the top consumer, China, may fall. The proposed US tariffs on various imports from China, including tyres, may lower production in China.

Thus, even if natural rubber prices rise due to lower supply of the commodity, it may not climb sharply.

(BL)

 

 

‘Prescribe norms for local raw cup lumps first’

By Express News Service  |   Published: 06th April 2018 04:54 AM  |  

Last Updated: 06th April 2018 04:54 AM  |   A+A-   |  

KOCHI: The meeting called by the Bureau of Indian Standards (BIS) in New Delhi on Thursday to prescribe a common quality standard for raw cup lumps - the residual lump formed from natural latex that coagulates in the cup after tapping is over - has met with strong opposition by the rubber growers’ representative and two other experts.

Following the stiff resistance, it was decided to conduct a detailed study to prescribe guidelines for the local raw cup lumps over a period of three years, it is learnt.Santhosh Kumar, vice-chairman of the Association of Latex Processors (Kerala), who attended the meeting in Delhi, told Express that he argued it was impossible to prescribe a common standard for the raw cup lumps as they are very often heavily contaminated with varying degrees of moisture and dirt, often harbouring microbes and disease-containing organisms.

Kumar was supported by Rubber Board joint director (crop physiology) Annamalai Nathan K, and Jayakumar, another participant.“We argued an expert committee should be appointed to study and prepare guidelines for arriving at a common standard for the local raw cup lumps,” said Kumar. Tyre manufacturers and other industry representatives were in favour of prescribing a common BIS standard, which will help them import the commodity.The meeting was chaired by Rubber Board secretary N Rajagopal.

 

 

 

 

 

 

 

 

Rubber growers against Centre’s move to fix quality standards for cup lump imports

KOCHI, MARCH 27

The Indian Rubber Growers Association has urged the Commerce Ministry to desist from fixing standards for imported cup lumps, saying that it is anti-farmer and against the interest of rubber industry.

The move to fix standards and import of rubber cup lumps is unjustified since there is no standards with regard to its quality are available in the world, the association said in a memorandum to the Commerce Minister.

Cup lumps are oxidised rubber, mostly contaminated with dirt and other extraneous material, and their import has been prohibited as a phyto-sanitary measure by India.

According to Siby J Monippally, General Secretary of the association, it is not possible to fix standards for cup lumps since it is a natural material with variations, hetrogeneties and contaminates.

Unlike RSS-4 and ISNR grades, he said cup lumps are not clean and it contains pathogens, disease carrying organisms. The import of this material will affect not only rubber but other crops too. It is pertinent to note that rubber cultivation in Brazil was wiped off due to import of inferior quality raw material, he said.

The Association of Planters of Kerala also opposed the move saying that India is already importing 45 per cent of its rubber requirement by way of processed TSR made from these cup lumps abroad.

Meanwhile, the first meeting of the joint task force — set up to study the problems faced by rubber farmers in Kerala — decided to work on increasing the production incentive for farmers and curbing rubber imports.

There were also discussions to consider rubber as an agricultural crop rather than a commercial produce, paving the way for declaration of minimum support price and financial support under the income doubling scheme for farmers.

 

 

 

 

 

 

 

 

Task force seeks import curbs on rubber

Meeting calls for Central support to prevent farmers from giving up rubber cultivation

The first meeting of the joint task force set up to study the problems faced by rubber farmers in Kerala has decided to work on increasing the production incentive for farmers and curbing the import of rubber.

The meeting chaired by Chief Secretary Paul Antony decided to convene a meeting of rubber farmers to understand their problems and come up with recommendations. It called for Central support to prevent farmers from giving up rubber cultivation due to high input costs and slump in prices.

One of the major items that came up for discussion was to consider rubber as an agricultural crop rather than a commercial produce, paving the way for declaration of minimum support price and financial support under the income doubling scheme for farmers.

State’s demand

State representatives on the task force highlighted the need to include rubber in the livelihood security box under trade treaties to protect the interests of the large number of small and marginal farmers in the sector. They called for a total ban on import of cup lump rubber, stringent standards for imported rubber and steps to prevent dumping of cheap rubber products.

The meeting discussed the need to revise the plantation subsidy, extend the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) to the plantation sector and promote the use of rubber as an additive for bitumen.

The Central government representatives who attended the meeting included the Joint Secretary, Commerce Ministry, and the Secretary and Director, Rubber Board. Apart from the Chief Secretary, Agriculture Production Commissioner Tikka Ram Meena was part of the contingent from the State. The Tripura Chief Secretary who is the co-chair of the task force did not turn up. Expressing satisfaction over the meeting, Agriculture Minister V.S. Sunil Kumar said the government would organise a consultation with farmers in April to collect inputs from them. He said the draft recommendations of the task force would be posted on the website of the Commerce Ministry to seek feedback and suggestions from the stakeholders.

The task force was set up following a meeting between Mr. Sunil Kumar and Union Commerce Minister Suresh Prabhu last month.

 

 

 

 

 

 

 

 

 

 

National rubber policy in the making : Prabhu

PTI

Union Minister Suresh Prabhu   -  BusinessLine

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