High Rubber Prices To Continue In 2011 As Well

Domestic as well global rubber prices rallied to fresh historical highs due to heavy rainfall in top natural rubber producing areas of Southeast Asia like Thailand and India which may hit output for current year. Prices have also been supported by healthy demand from tyre industry and strong imports in China .

Indian rubber supplies peak October-January, but this year unseasonal rains have been hindering tapping.

Rubber RSS-4 prices at Kochi market rose to fresh record of Rs 20,700 per quintal on Friday against Rs 16,200, three-months back and Rs 13,500 at the start of 2010. In the last two years natural rubber prices at Kochi have risen by 300% from Rs 69-70 per kg in January 2009 to record high Rs 207 per kg now. Such type of volatility was last seen in 1994-1998 when price rose from almost Rs 2,500 per quintal to near Rs 6,000 within two years and again fell sharply towards Rs 2,700 level in 1998.

The world's major rubber producers Thailand, Indonesia and Malaysia have been hit by heavy rains because of the La Nina phenomenon which cause drop in production.

All these have been supported by geopolitical tension in Korea, high crude oil prices. Singapore-based International Rubber Study Group has estimate that global rubber demand in 2010 may rise 12.7% to 23.9 million tonne.

Auto sales at China overtook that in the US in 2009 to become world largest auto market which is almost double in last four years from below 7 million units in 2006 to 12.99 million units in 2009 according to a report. While in India , sale of vehicles—including cars, utility vehicles, trucks, buses, motorcycles and scooters—jumped an annual 26.4% in 2009-10 to 12.3 million units, data from Society of Indian Automobile Manufacturers (SIAM) showed.

Natural rubber is produced from latex or field coagulum obtained from rubber trees. In India sheet rubber classified as RSS1, RSS2, RSS3, RSS4 and RSS5 is mostly produced and marketed in local markets.

Thailand is the world largest natural rubber producer in the world almost 3.5 million tonne a year followed by Indonesia 2.8 million tonne. Malaysia, India, Vietnam and China are the other major producer with less than 1 million tonne produce a year.