Market sentiments strong amid fluctuating rubber prices, claim growers

Rubber Board data indicates that RSS-4 price slipped from ₹236 per kg at the end of August to ₹225 by Saturday; surging prices could significantly impact tyre makers’ profitability, says CRISIL

Despite fluctuating natural rubber (NR) prices, market sentiment remains strong as the global stock of NR is expected to decline substantially by the end of the year.

Market fundamentals for natural rubber currently remain unusually strong. The global stock of NR was expected to decrease by 1.2 million tonnes by December this year, said Babu Joseph, secretary of the National Consortium of Rubber Producer Societies.

He added that the shortage meant the next lean season of world supply, beginning in mid-January 2025, was expected to start with an abnormally low global stock. He also claimed that the total inventory of NR at warehouses in Qingdao had fallen to an alarming level, equivalent to the quantity needed to meet China’s consumption for less than three weeks.

Meanwhile, a market analysis by CRISIL said that “inflated natural rubber prices would puncture tyre maker margins.”

The report stated that tyre makers were headed for a rough patch, as the price of natural rubber had surged more than 33% year-on-year in just the first five months of this fiscal year due to strong demand and short supply. This could affect the profitability of tyre makers, the communication from CRISIL added. “The natural rubber market closed August at ₹238 per kg, way above the trend in the past decade,” the communication said. CRISIL also claimed that the last time the commodity breached the ₹200 mark was in 2011, buoyed by a rise in demand following the global financial crisis.

According to the Rubber Board data, the RSS-4 price at the end of August was ₹236 per kg. It slipped to ₹231 in the first week of September, fell to ₹229 in the third week, and rose to ₹230 in the fourth week. The price was ₹225 per kg on September 28 (Saturday).

Published - September 28, 2024 07:14 pm IST