Rubber slumps on weak demand, stock pile-up
Demand crunch and high inventory are causing Indian rubber prices to fall, despite a slight gain in the global market. The spot market was closed for two weeks. On the Indian Commodity Exchange (ISX), the April contract for delivery is marginally lower, at Rs.117 per kg.
“The country needs two and a half million tonnes of rubber with different partners. Demand from the tire sector has been muted with the exception of MRF, which has been buying good quantities for the past few months. The Federation writes to the Rubber Board that the import of tires, rubber, and other related products should be banned until the present crisis is over.
This is the only way for the rubber industry’s farmers, traders and workers to survive. Consumption of 13 lakh tonnes is not expected this year. Meanwhile, Kerala, the largest rubber producer in the country, is experiencing summer rains in many parts of the country. This helps to re-start tapping after a lockdown.
But many tire companies are trading in stocks and it may be delayed to buy them from the domestic market, ”said George Valley, a Kottayam-based rubber trader. Crude oil has outperformed the Tokyo Commodity Exchange (TOCOM) and India’s low price trend. The benchmark September tokom rubber rose 2.5 yen to 151.30 yen from Tuesday.
“If OPEC + 14-15 agrees to reduce the output, it will help boost oil prices, which will increase the price of rubber in Essex to Rs 120 per kg,” said Kunal Shah, head of commodity research at Nirmal Bang. However, if the cut is 10-12 MBPD, it will reduce the market sentiment. Earlier this month, the ANRPC was forecast to drop below 100 per kg in India, as global economies predict that demand will decline in the next quarter as more economies come into lockdown to reduce the spread of COVID-19.
We are cautious about prices as global demand is unlikely to recover quickly. Despite demand from China, we see that when physical markets open, the price is Rs 115 per kg, but before the minimum it is reduced to Rs 105-100 per kg, Accum Capital MD Akshay Agarwal said.