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.
Global Trends
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.
Indian Situation
India produces around 800,000 tones of rubber while its consumption is also on the same level. Firming up in global level has helped natural rubber prices to gain over 20 percent to Rupees 6,699 per 100 kg in 2005006 (Apr-Mar) compared with the same period a year ago. In 2006-07, the rubber prices are ruling firm.
The main consumers of natural rubber in India are tyre makers. Tyre companies account for nearly 60 percent of the consumption while the rest is accounted by non-tyre sector. 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.
India\'s Forex reserves fell to $311.79 billion, down by $691 million for the week ended June 27 as against $ 312.481 billion in the last week, RBI said in its weekly report.
Forex dealers said the rupee drew support from a firm trend in local equity market but was still under pressure due to fresh surge in crude oil prices.
Indian rupee opened trading in a positive note Friday as investors covered their short positions but with oil holding above $145 a barrel and shaky stock markets raising prospects for more capital outflows, gains may be limited.
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