Tyre firms buy rubber at record $4.33 a kg

SIR20/SMR20/STR20 processing line not for tyre or recycle hnsinyoung.com

Indian tyre makers on Monday bought natural rubber at Rs 192.5 ($4.33) a kg, a record high as unseasonal rains tightened supply in the world’s fourth biggest producer, three dealers said.

Tyre makers bought RSS-4 rubber (ribbed smoked sheet) paying as much as Rs 19,250 a quintal at Kottayam, a key spot market in southern state of Kerala, higher than Rs 19,100 they paid last month.

Earlier in the day, the benchmark rubber November contract on the National Multi-Commodity Exchange (NMCE) hit a contract high of Rs 19,837 a quintal, the highest level for the near month contract since futures trade launched.

"Lower supplies are pushing up prices...rainfall is disturbing tapping. On weekend, Kerala received rains," said Ibrahim Jalal, treasurer of The Indian Rubber Dealers Federation (IRDF).

Weather department on Monday said Kerala, which accounts for nearly 90 per cent of the country’s output, may get rains in next four days.

Usually rubber supply in India peaks during October-January, but this year unseasonal rains have been hindering any progress in tapping.

India is likely to produce less than 85,000 tonnes of natural rubber in October, down 10.5 per cent from earlier estimate as heavy unseasonal rains adversely affected tapping, industry and government officials said last week.

Jalal sees the current high prices sustainable, if rains continue in Kerala for some more days. "Demand is very good from tyre and other rubber consuming industries," he said.

The record high rubber prices are hurting margins of local tyremakers that have been struggling to pass on the cost to end-users. Heavy unseasonal rains in key natural rubber producing countries are likely to worsen tight supply situation in October-December, the Association of Natural Rubber Producing Countries (ANRPC) said last week.

(sify.com)