Page 1 of 6
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 03
March 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 18
Will Nr Price Fluctuations
Remain Intact?
Dr. U. A Abdul Khalam
Asso. Professor, Dept. of Commerce, Iqbal College, Peringamala
Sri. Stephen Mathew
Asst. Professor, Dept. of Commerce, St. Stephen’s College, Uzhavoor
ABSTRACT
Over the last several years, domestic NR prices have been moving in tandem with the
international prices. Prices in the international market have been seeing a downtrend since the
second quarter of 2011. The trend is mainly a result of the growing concerns about world
economy, particularly in the light of the debt crises in the Euro zone. There is a fall in import
demand from China and piling up of inventory in Qingdao Free Trade Zone. The corrections in
crude oil prices also had a negative impact on the market. Crude oil prices, currency exchange
fluctuations and weather factors also play a role in rubber production, consumption and price.
Most of these factors are volatile. The world economy is in a phase of slow recovery though with
several downside risks.
Key Words: Natural Rubber, International Market, Price Fluctuation, Crude Oil Price, Global
Supply, Industrial Consumption
Introduction
Rubber prices have stayed steady in India in
the past two weeks, unlike in the
international markets where the rates have
fluctuated, due to subdued demand even as
the supply has gone down. The RSS-4 sheet
variety used by the tyre industry has
remained flat at Rs 124 per kg as the tapping
season is winding to a close in the largest
rubber producing state of Kerala.
The rubber industry, particularly small scale
sector, has been hit hard by the shortage of
carbon black, an important raw material for
the tyre and non-tyre industry. The industry
is functioning at 50 per cent capacity.
Liquidity has been severely affected and we
find it difficult to get payments for the
supply. There had been considerable
improvement in the early part of 2017. And
so the industry recoded an increased
consumption by 2.4 % that reached up to
27.36 million tonnes by the end of 2017.
This more optimistic outlook will also apply
to 2018.While demand has slackened, there
is short supply of rubber in the market. The
tapping season usually comes to a close by
the end of January. But this year intermittent
Page 2 of 6
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 03
March 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 19
rains at several places in the state helped
continue tapping, albeit at a low level. The
tapping could have been more intense if the
prices had improved. Most growers are not
interested in tapping at such a price.Rising
yen and a fall in crude oil prices had led to a
fall in global rubber prices in the past few
days. With international block rubber prices
around Rs 30 below the current Indian
rubber prices, the tyre industry has been
depending largely on imports to meet its
requirement despite the recent 10% hike in
import duty. The industry was buying a
portion of its requirement from the domestic
market too, but the shortage of carbon black
has made it go slow on purchases. The low
prices would severely affect production.
Monthly Production and Consumption of NR (Tonnes)
Month Production Consumption
2014-15 2015-16 2016-17p 2014-15 2015-16 2016-17p
April 51000 40000 39000 81500 80815 83750
May 53000 45000 46000 83800 81765 86775
June 63000 47000 50000 85285 80955 88065
July 54000 47000 52000 88400 83400 88340
August 51000 48000 58000 86300 82725 87000
September 60000 50000 60000 86280 81600 84000
October 55000 52000 62000 82000 82650 85000
November 60000 53000 65000 85300 77880 87765
December 63000 58000 70000 85820 85250 85280
January 58000 52000 72000 83850 84875 84600
February 42000 37000 62000 83025 84320 87500
March 35000 33000 55000 89350 88180 96000
Total 645000 562000 691000 1020910 994415 1044075
Source : Natural Rubber Trends and Statistics Vol. 9 No. 8 Aug. 2017, ANRPC, Malaysia.
Forecast regarding domestic production and
consumption of NR in the current fiscal is
optimistic The Rubber Board had forecast
that natural rubber output would touch
691000 tonnes this year. However, growers
and traders estimate that the production
could be around seven lakh tonnes, up from
6.91 lakh tonnes in 2016-17.
Monthly Import and Export of NR (Tonnes)
Month Import Export
2014-15 2015-16 2016-17p 2014-15 2015-16 2016-17p
April1 29430 36957 34550 28 8 91
May 37918 36964 35445 32 0 98
June 33377 38923 37336 61 6 44
July 43133 41917 41258 55 39 42
August 49108 37413 48853 8 155 28
September 43674 42713 52974 8 25 222
October 42625 43276 44601 8 113 125
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Page 3 of 6
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 03
March 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 20
November 37445 35226 40831 83 88 640
December 34324 45586 25076 118 23 2232
January 29141 39512 24279 117 214 6329
February 30879 31864 15690 211 161 6212
March 31076 28023 25295 273 33 4857
Total 442130 458374 426188 1002 865 20920
Source : Natural Rubber Trends and Statistics Vol. 9 No. 8 Aug. 2017, ANRPC, Malaysia.
According to the Rubber Board sources, the
production and consumption of NR in India
indicates a deficit of 353075 tonnes.
However the deficit will not affect the
industry. The manufacturers had opportunity
to import more than 1,25,000 tonnes through
duty-free channels. So far considerable
amount of rubber has been imported.
Factors Impacting Price
Fluctuation
Attempting a forecast about prices in the
near future would be difficult as it primarily
depends on the movements in global
economy. The main factors impacting
international rubber prices are as follows:
Global supply/demand position,
Crude oil price movements
Impact on prices of synthetic substitutes,
Exchange variations of currencies of
major exporters.
These factors directly weigh on the domestic
NR market as well. Over the last so many
years, domestic NR prices have been
moving in tandem with the international
prices. Prices in the international market
have been seeing a downtrend since the
second quarter of 2011. The trend is mainly
a result of the growing concerns about world
economy, particularly in the light of the debt
crises in the Euro zone. There is a fall in
import demand from China and piling up of
inventory in Qingdao Free Trade Zone. The
corrections in crude oil prices also had a
negative impact on the market.
Crude oil prices, currency exchange
fluctuations and weather factors also play a
role in rubber production, consumption and
price. Most of these factors are volatile. The
world economy is in a phase of slow
recovery, though with several downside
risks.
Replanting rate is expected to be higher in
the coming years and so oversupply is not
likely. These are expected to be positive
factors in sustaining demand and prices in
the coming years.
By mid-May last year all price-gains made
earlier in the second quarter in the Natural
Rubber markets, have been completely
diminished. Since then some significant
hikes have been recorded in Thailand, Japan,
China and Malaysia. However, in overall
markets are still far behind the peaks
reached in April, which suggests that the
attempt by the producer-country to
rebalance the market is losing strength. A
deal made between Malaysia, Thailand and
Indonesia to cut rubber exports by 615
kilotons during the six months until August
has largely driven the market recovery.
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