Peak production season in natural rubber has come to a close in India by the end of January. Generally rubber price should firm up from the third week of January anticipating the supply crunch ahead, as production boom will peter out by then and in February it would drop to around 60% of the output in January.
But reaction of the market early in February appears to be resistance to bounce back. The price of sheet rubber RSS 4 has dropped to around Rs.188 a kg in the week 30 January/3 February 2012 from the closing price of Rs.191 for the grade in the previous week. This should be on account of the high carryover stock, estimated around 275,000 tonnes at the end of January. Block rubber ISNR 20 dropped to Rs.187 from Rs.190.50 a kg.
Latex market
At the same time, latex market was sizzling. Centrifuged latex of 60% dry rubber content bounced back strongly from Rs.112 at close of the previous week to Rs.121 a kg on 3rd February, as demand was strong in the midst of low supply. Many growers have suspended tapping and given rest to the rubber trees from the close of January on account of the usual leaf fall in the plantations with the onset of wintering. Consequently, latex centrifuging factories were not able to get enough field latex for processing.
Rubber price in India has been ruling lower to the international price by about Rs.11 a kg for sheet rubber from the last week of January 2012, after ruling higher than the international market with a premium peaking around Rs.20 a kg during the four months from October 2011. This low price situation presents a good opportunity for traders to make gains through rubber export, but market trends indicate that the opportunity has not been exploited at least by the traders of sheet rubber.
Price support procurement
The positive market sentiment created by Thai Government’s decision to make price support procurement continued to influence the overseas rubber market during the current week. Price of sheet rubber RSS 3 moved up gently from $ 4.01 to 4.04 a kg in the Bangkok market while block rubber SMR 20 was almost steady around $ 3.71 a kg. Latex availability being low in the Asian region during the week, it made a stronger advancement in the market. In the Kuala Lumpur market, latex 60% rose from $ 2.47 to $ 2.53 a kg. However, news about rubber stock in China’s bonded warehouses in Qingdao, the major rubber manufacturing province of the country going up between 230,000 and 250,000 tonnes, had a moderating influence on the market.
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