A number of major rubber-producing nations have witnessed extensive damage to their plantations due to heavy rainfall, which has caused a demand-supply shortage
Prices of natural rubber which have seen an upward movement in recent weeks due to lower supply and higher demand, may remain flat after December, say experts. On Monday, natural rubber touched an all-time high of Rs202 per kg in the Indian market.
"Rubber prices are rising as there are supply constraints. Heavy rains in the southern region have affected rubber collection. As there is no respite from these rains, rubber prices may go up by another Rs2 to Rs3 (per kg). However, the weather should improve after December; rubber production will be back on track," said Ibrahim Jalal, treasurer, Indian Rubber Dealers Federation, an all-India rubber dealers' association.
Heavy rain in major natural rubber producing countries (Thailand, Indonesia, Malaysia and Vietnam) has damaged rubber plantations, leading to a supply shortage amid strong demand from consumer-tyre manufacturers in these countries. The growing demand for rubber is fuelling prices almost on a daily basis.
"Prices are increasing in the domestic and international markets. It's difficult to predict tomorrow's prices. There has been unexpected rain in November and it is disturbing the tapping process. Even whatever rubber that has been tapped is not coming into the market," Biney Kurian, deputy director, marketing, Indian Rubber Board, told Moneylife.
"We are expecting a little correction once the weather improves. Many manufactures are running out of stock, so their first objective will be to fill up their inventories," said Mr Kurian.
A CRISIL Research spokesperson told Moneylife, "Global prices of natural rubber have been ruling high in the current year due to supply issues arising from natural calamities in Malaysia and Thailand, two major rubber-producing countries. Domestic prices between April-October were higher than the previous year by 70 %. While we do not expect any further increase in rubber prices for the rest of the year, average prices for FY11 will be higher by 55%-60%."
According to Thailand's Department of Disaster Prevention and Mitigation, about 1.9 million acres of agricultural land, or 4.8% of total arable land, was damaged by floods that spread across 51 provinces in that country.
"Bad weather in these countries has affected rubber production and it would prop prices at the international level as well," Mr Jalal said.
According to data published by the Indian Rubber Board, last month, the price of Ribbed Smoked Sheet four grade (RSS-4) grew by Rs1,467 to Rs18,112 per 100kg (quintal), while RSS-3 surged by Rs1,337 to Rs18,506 per quintal.
The rally continued in the first week of this month as RSS-4 prices went up further by Rs647 to Rs19,580 per quintal. Prices of RSS-4 on the Bangkok Commodity Exchange increased by Rs 405 to 19,504/100 kg for the first week ending 6th November.
In India, rubber production dropped 7.6% to 82,000 tonnes last month compared with 88,775 tonnes in the same month of last year. However, the consumption stood at 81,500 tonnes in October against 77,650 tonnes in the same month of last year.
The drop in production was due to heavy rain in Kerala, according to Mr Jalal.
Natural rubber imports in India surged by 81.2% to 18,148 tonnes in October on increased demand from tyre manufacturers and slowdown in production. Surge in prices of rubber has reflected in prices of tyres. Since April, prices of tyres have increased by 10%.
"Tyre producers have not increased prices of their products since the last two months, but raw material prices are very volatile and it's difficult for them to fix prices. In the future, if prices show the (same) uptrend, then tyre companies would think of hiking prices of products," a senior official from the Automotive Tyre Manufacturers' Association (ATMA), who preferred anonymity, told Moneylife.
According to ATMA, during September, tyre production increased 26% to 1 crore units from 79.8 lakh units, the same month a year ago. The average monthly production for the first six months of this year grew by 28% to 95.3 lakh units compared with 74.4 lakh units during the same period last year.
New Delhi: Food inflation declined to 12.30% for the week ended 30th October from 12.85% in the previous week, on improved supply of items, showing a downward movement for the fourth straight week, reports PTI.
While most food items like wheat, pulses and potatoes turned cheaper, onions became costlier as their prices rose about 10% within a week.
Considering that food inflation stood at a high of 12.59% during the corresponding week of last year, even 12.30% inflation is quite elevated.
Earlier this month, the Reserve Bank of India (RBI) raised its short-term rates to tame inflation saying prices of protein based food items are still high.
However, the prime minister's advisory panel believes that food inflation could be tamed through improved production.
At a function, Prime Minister's Economic Advisory Council chairman C Rangarajan said, "Food inflation is caused by shortage of food and supply. In the mid-term we need to ensure that supply is increased through production to curb inflation."
Kolkata: The union government is framing guidelines and rules for the proposed competitive bidding for auction of coal blocks, reports PTI.
"We are currently framing and drafting guidelines for auction of coal blocks and we hope to complete and begin the auction process in the next three to four months," coal secretary C Balakrishnan told PTI.
Parliament in August passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2010, which paved the way for introduction of auction through competitive bidding for allocation of coal blocks to private companies for captive use.
To encourage greater transparency, the Bill seeks to replace coal block allocation done by a government screening panel with allocation of coal blocks through auction.
At present, an inter-ministerial screening committee, which includes representatives from concerned state governments, allocates coal blocks to private firms engaged in generation of power, production of iron and steel, and some coal washeries.
Coal India, which is the country's largest coal miner, does not intend to participate in the forthcoming bidding and instead seeks preferential allotment to some blocks.
The country's coal demand in 2010-11, which is now pegged at 656.31 million tonnes, is projected to rise to two billion tonnes per annum by 2031-32.
Trade union leader R C Singh affiliated to CPI alleged sometime back that private sector companies had been sitting tight on 138 blocks of coal and that no one knew when they would start operation.
Several companies, which have no link with the power or steel sector, have also been allotted the blocks, he alleged.
Concerns were also expressed in several quarters for the degradation of environment and forests, as private companies which bagged the coal leases through auction, are likely to go for open cast mining.