For tire recyclers, natural rubber prices are profoundly important to monitor. Some recycled rubber powder applications highly correlate with those of NR.

Asian online magazine Global Rubber Markets reports on surge in natural rubber (NR) prices which hit the record of INR 158 (USD 2.35) per kg of RSS-IV grade on the spot markets Kerala this Monday. Among the factors which triggered rise of prices were increased automobile demand in China, heavy rains in North Thailand and oil price increase. Since January 2014, this is the highest price of the most-traded rubber RSS-IV (RSS stands for ribbed and smoked sheet).

Notwithstanding the price of INR 158 (USD 2.35) is the official figure announced by the Rubber Board, some sources claim that non-tire businesses commenced supplying the commodity at INR 160 per kg. Moreover, there were transactions at INR 163-165 (USD 2.43-2.45) for trade of futures which reached even INR180 (USD 2.67). Officials of Rubber Board link the reasons of the unexpected surge in prices to heavy rains in North Thailand, increase in oil prices, rise in car sales in China and speculative buying.

Unhappy farmers

Unfortunately rising prices didn’t bring any cheer to the farming community. Currently, the rubber season draws to a close and in the aftermath of supply break farmers are not willing to sell at the current prices and they opt for expecting the higher ones.

Usually, the new yield of rubber begins in the end of May after a 2-month season break. But this year, a massive drought looms over Kerala according to a weather forecast.

Demand by tire industry

George Valy, President of the Kottayam Rubber Dealers Association, claims that tire manufacturers aggressively supply from the domestic market due to the currently high NR import prices. At the same time, tire producers assert that NR price surge will take on adverse effects on the whole tire industry.

Senior representatives of the Automotive Tire Manufacturers Association (ATMA) claim that the industry is at a profoundly difficult stage, because top-line growth slowed down. Even the bottom-line experiences pressure as NR is a primary raw material in the tire industry.

Rubber prices haven’t yet come to the level of international prices and, according to the statement by Indian Farmers Movement (Infam), Indian growers should be granted with benefits of international prices for their products. PC Cyriac, the president of the company, says that the prices are suppressed by the tire companies. Currently, the import price of rubber is INR 240 (USD 3.56) which makes companies to rely on domestic procurement to meet their requirements.

Source: Global Rubber Markets