Natural rubber futures in India are likely to fall this week on sluggish demand from tyre makers, although thin supplies in local spot markets are likely to restrict the downside. The key October rubber contract provisionally ended 0.8 percent lower at 19,411 rupees per 100 kg on the National Multi Commodity Exchange on Monday.
The spot price of the most-traded RSS-4 rubber (ribbed, smoked sheet) in the Kottayam market in Kerala was steady at 19,500 rupees per 100 kg. "Tyre makers are raising imports. Despite paying the import duty, they are cheaper than local supplies. Effectively, tyre makers are cutting local purchases," said a dealer based in Kottayam.
Imports jumped 21.2 percent to 95,047 tonnes in April-August from a year earlier. India imports natural rubber from Thailand, Indonesia, Malaysia and Vietnam. "Farmers are holding back supplies. They are selling negligible output in the market. Tight supplies are giving support to prices," said George Valy, president of the Indian Rubber Dealers Federation.
Key Tokyo rubber futures shed early gains to end almost flat on Monday, hit by fresh evidence of slower growth in China, the world's biggest rubber consumer. India's natural rubber production in August edged up 2.5 percent on year to 73,000 tonnes, the state-run Rubber Board said last month. The world's fourth-biggest producer is likely to produce 942,000 tonnes of natural rubber in the current year, up from 899,400 tonnes a year ago.