India's natural rubber production is esstimated to be around 9.42 lakh tons and consumption to be around 10 lakh tons for 2012-13, according to Indian Rubber Growers Association (IRGA).
Natural rubber is one of the most important agro-based industrial raw materials in the world. An important ingredient in tyre making, rubber is also used widely in the manufacture of a slew of non-tyre goods. Tyre and non-tyre grade rubber is made out of latex obtained from rubber tree. Nearly 60 percent of the natural rubber is consumed by the transport sector.
Rubber is actively traded in all commodity exchanges but it was banned for a brief period by the government of India taking into consideration of some intense lobbying by a section of rubber consumers who claimed the prices fluctuated or shot up high on account of exchange trading. The rubber prices have now come down heavily from its peak.
Global natural rubber output is estimated to be around 8.6 million tons with Thailand, Indonesia, Malaysia and India leading the pack. China, US, Japan and India are the leading consumers of natural rubber. Global natural rubber output is slightly lower than consumption and that has helped rubber prices to touch high levels during 2005 and 2006.
Tokyo Commodity Exchange, Singapore Commodity Exchange and Agriculture Futures Exchange in Bangkok are the major global rubber futures market. The three national commodity exchanges in India offer futures contracts in rubber.
India produces around 800,000 tones of rubber while its consumption is also on the same level. The main consumers of natural rubber in India are tyre makers. The Indian rubber industry is entitled to import natural rubber under the advance license scheme in lieu of exports.
Import and export of natural rubber from India is shaped by the gap between global and Indian prices. If global prices are ruling higher compared with domestic price imports will be less while the opposite would take place in the case of domestic price staying higher compared with global prices.
Most popular grades used by Indian tyre makers are known as ribbed smoked sheet or RSS-4. The main spot markets for rubber in the country are Kottayam, Cochin and Kozhikode in Kerala. Domestic climatic conditions, government policies and global prices are key factors that influence domestic rubber prices.
Tokyo Commodity Exchange, Singapore Commodity Exchange, Osaka Mercantile Exchange are the major exchanges undertaking futures trading of rubber. Kuala Lampur, London, New York are the major physical markets.
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