Dull demand keeps rubber prices low

KOCHI: The gap between Indian and international rubber prices is widening due to a subdued local demand. Indian prices are flat as poor tyre and car sales dampen demand for rubber. Global prices are rising because the Thailand government has decided to build up reserves.

Tyre makers had stepped up imports in the last few months to take advantage of low international prices. However, the situation changed after the Thailand government initiated a move in the last week of January to buy 2 lakh tonne to arrest the slide.

Though the market intervention price scheme is yet to come into effect, global rubber prices have been looking up since then.

Global prices have been hovering around Rs 200 per kg. The Indian rubber prices are at around Rs 185 per kg since there has been no pickup in demand.

"Whatever had come into market was the stock held by dealers. Growers are reluctant to release the stock at the current price and only some of it has hit the market," said a prominent rubber dealer.

"Tyre demand was not to our expectations in January and we have build adequate inventory through imports to last over a month,'' said Vijay Gambhire, senior vice president, (materials), Ceat. Apart from import against export, the company is not pushing for more imports now as the price situation has become unfavourable.

Tapping is expected to slow down further as summer advances. It has already come down, squeezing production. But the absence of demand will keep prices flat, according to traders.