Natural Rubber Price – Decline Continues

With the automobile sector in a crunch and factories shutting down, demand from the tyre industry is subdued

Price of natural rubber in India has plummeted to a new low on accounts of falling global price and poor demands from tyre makers. According to rating agency ICRA, the slowdown in the market is likely to curtail the revenue growth to between three and four per cent in the financial year, as compared to 6.7 per cent in the 2018-19.

The price of RSS-4 variety rubber, used for making tyres fell by 7 per cent in a month to Rs 140 per kg. Its equivalent in the global market has become early 12 per cent cheaper at Rs 107.78 per kg over the same period.

The prices are expected to fall further in the coming weeks, says experts. As per the data received from Indian Rubber Board, rubber production in the country in the quarter ended June was marginally down to 123,000 tonnes. Consumptions were down by 4 per cent to 293,000 tonnes. Meanwhile, the world production of natural rubber has also registered a decline of 6.5 per cent to 4.930 million tonnes during the first five months of 2019.

With automobile sales and economic growth touching multi-year low, the industry is facing revenue pressure. However, the government has announced a slew of measures recently to address the slowdown of the automotive industry.

It has lifted the ban on the government departments from buying new vehicles and has also doubled the tax benefit for automaker. Vehicles purchased till March 31, 202were will remain operational till entire period of registration. The automotive industry has responded positively to the measures announced by the government as it is also likely to benefit tyre sales too.