At the Indian Commodity Exchange(Icex), April contract for delivery was marginally lower at Rs 117/ kg with just 20 lots of outstanding open interest.
Meanwhile, the current spell of summer rains in different parts of Kerala — the largest rubber producer in the country — is expected to augur well for production.
Demand crunch and high inventory are keeping Indian rubber prices depressed despite a slight recovery in the global market. The spot market has been closed for nearly two weeks. At the Indian Commodity Exchange(Icex), April contract for delivery was marginally lower at Rs 117/ kg with just 20 lots of outstanding open interest.
“There should be around 2.5 lakh tonnes of rubber with various stakeholders in the country and the demand has dried up,” said Tomy Kurishumoottil, president, Indian Rubber Dealers Federation. He said except for MRF — which bought a good quantity in the last couple of months — demand has been muted from the tyre sector.
The federation has written to Rubber Board to request the Centre to ban import of tyre, rubber and other related products till the present crisis is over.
“This is the only way that the growers, traders and workers in the rubber industry can survive. The expected 13 lakh tonnes of consumption this year is not going to happen,” Kurishumoottil added.
Meanwhile, the current spell of summer rains in different parts of Kerala — the largest rubber producer in the country — is expected to augur well for production. “It could help in resuming tapping after the lockdown.
But most tyre companies are flush with stock and procurement by them from the domestic market could be delayed,” said George Valy, a rubber-dealer based in Kottayam.
Low price sentiment in India has outweighed firm trend on the Tokyo Commodity Exchange (Tocom) and gains in crude oil. Benchmark September Tocom rubber ended at over a week high at151.30 yen a kg, up 2.5 yen from Tuesday.
“If Opec+ agrees on 14-15 mbpd output cut, it could push oil higher, supporting rubber prices to top Rs 120 per kg on Icex,” said Kunal Shah, head of commodities research, Nirmal Bang.
However, he added, if the cut is 10-12 mbpd, it could dampen market sentiment. Rubber prices were expected to slip below Rs 100 per kg in India earlier this month after global body ANRPC forecast sluggish demand in the coming quarters as more and more economies go into extended lockdown to curtail the Covid-19 outbreak.
“We continue to maintain a cautious view on prices as global demand is unlikely to recover quickly and despite demand from China, we see prices opening near Rs 115/kg when physical markets open, but dipping to about Rs 105-100/kg before lower prices bring in buyers in the physical market,” said Akshay Agarwal, MD, Acumen Capital.
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