Rubber price crosses Rs 100 per kg mark as demand grows

Over the past month the demand for rubber by tyre companies has increased, as the auto industry shows signs of recovery. This has led to 37 per cent increase in rubber prices to over Rs 100 per kg. Tyre firms have also stepped up rubber imports with local prices quoting at a premium to international prices. George Valy, President, Indian Rubber Dealers Federation, said, “Earlier, due to low demand, tyre companies were not keeping much of inventory and running at close to 75 per cent capacity. But now they are running at higher capacities with demand picking up — especially by original equipment manufacturers.”
There was some demand from the auto industry but that it was not the major reason for a price rise. With all the tyre plants running, companies will double their imports this year (2009-10 ) to 1.6 lakh tons compared to the previous year as rubber is not available locally.  With imports expected to increase, local prices would correct as growers will start bringing their stocks to local markets. The growers were holding back between 75,000 and 100,000 tons of rubber since prices were rising daily. Despite the Rubber Board figures showing ample stocks of over 200,000 tons compared to lower stocks last year, the same are not being supplied in the local market, supporting prices. At present, Indian rubber prices are at Rs 15-Rs 18 per kg premium to the international prices being quoted at Singapore which is the main rubber trading centre. Rubber is produced mainly in Thailand, Indonesia, Malaysia and India.

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