Increase in Rubber Prices

Rubber prices hit an all-time high of Rs 13,500 per quintal at Kottayam spot market in Kerala following a rise in crude oil prices and firm global market. Production in 2007-08 fell to 825,000 tonnes from 853,000 tonnes in the previous year, chiefly because of heavy rains in Kerala, a key rubber producing state, and a viral fever that kept tappers away from work for more than a month.

Production of rubber in India
Kanyakumari in Tamil Nadu
Districts of Kerala.
Coastal regions of Karnataka
Goa
Andhra Pradesh
Orissa
Some areas of Maharashtra
Northeastern states (mainly Tripura)
Andaman and Nicobar Islands

Use of Rubber
The use of rubber is widespread, ranging from household to industrial products, entering the production stream at the intermediate stage or as final products. Tires and tubes are the largest consumers of rubber. accounting for around 56% total consumption in 2005. The remaining 44% are taken up by the general rubber goods (GRG) sector, which includes all products except tires and tubes.
Other significant uses of rubber are door and window profiles, hoses, belts, matting, flooring and dampeners. Gloves (medical, household and industrial) are also large consumers of rubber and toy balloons. Significant tonnage of rubber is used as adhesives in many manufacturing industries and products, although the two most noticeable are the paper and the carpet industry. Rubber is also commonly used to make rubber bands and pencil erasers.
Additionally, rubber produced as a fiber sometimes called elastic, has significant value for use in the textile industry.

Impact on Rubber Industry
The continued rise in the prices of natural rubber in the current financial year has set the Rs 19,000-crore tyre industry behind by almost Rs 1,000 crore. Combine this with tyre manufacturers' inability to pass on the increased cost to the consumers in view of the increased competition and it's double whammy for the tyre industry. According to Automotive Tyre Manufacturers Association (ATMA) the natural rubber (RSS-4) price that ruled at Rs 103 a kg at the beginning of the new financial year is currently hovering around Rs 120 a kg. This means a rise of Re 1 a kg every second day.
Figures released by the Rubber Board show tyre industry's consumption of natural rubber at 4.91 lakh MT. Back of the envelope calculation will show that every one rupee increase in natural rubber cost is adding an incremental cost of Rs 49 crore on the industry.
Natural rubber itself accounts for 42 per cent cost of raw material cost of the industry. The other raw materials are crude and steel based and both are facing inflationary pressures adding to the agony of the tyre industry.

Future Trend for Rubber Prices
The price of rubber is likely to increase further due to the shortage of the commodity and the upwrd trend in the price at international market, according to traders. The shortage in production was due to unfavourable climatic conditions and the unseasonal rains for the past couple of months.The fall in production was to the extent of 60% on an average and there is substantial loss in tapping days due to rain, traders said. If India plans to increase its rubber production in its costal areas, than the economic status of farmers is for sure going to improve.

Dated: 28th May 2008