Tyre makers blame futures for high rubber prices Seek cut in trading margins to 2%

Print this page Posted on : 04-23-2009 by recycleinme.com

A delegation from Automotive Tyre Manufacturers Association (ATMA) has met the Rubber Board Chairman, Mr Sajan Peter, in Kottayam and appraised him of the difficulties faced by the tyre industry on account of high level of prices of natural rubber.

The delegation headed by Mr Rajiv Budhiraja, Director-General, ATMA, raised concerns about lack of availability of natural rubber and expressed doubts about the stock levels projected by the Rubber Board.

Volatility

They also pointed out that the volatility in prices is neither good for growers or for the consuming industry.

The Association also sought intervention of the Board to restore normalcy by isolating the speculative interests and ensuring adequate and timely availability of natural rubber for domestic consumers.

Later addressing a press conference in Kochi, ATMA members alleged that the futures trading in rubber is responsible for the high level of volatility in rubber prices.

The tyre industry needs a monthly requirement of 40,000 tonnes.

However, the availability of rubber through futures is only 1,000-1,200 tonnes, not even one per cent of the requirement.

The Association demanded that the daily trading margins in futures trading should be reduced to two per cent from the existing four per cent.

The Rubber Board itself had written to Forward Market Commission in reducing the trade margins, they said.

Imports

Higher prices of rubber in the domestic market may substantially increase the natural rubber imports in the current year. The import is likely to touch 1.5 lakh tones as against 80,000 tonnes a year ago.

The unwarranted increase of prices has also led to tightness on the supply side.

Regarding the stock levels of rubber projected by the Board, Mr Budhraja said that the Board has already commissioned the Indian Institute of Plantation Management to make a study on the stock position.

He was of the view that the price would not have reached such levels if the stock position stays as high as projected by the Board.

Another concern raised by ATMA is the lack of availability of rubber despite the high price availability.

The area under natural rubber is not expanding in pace with the growth in consumption.

They had also called for long term plans to increase the area of plantation as well as re-plantation.

Source : Business Line