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17. May 2006

INDIA: Rubber price rise hits small units

Source: Daily "The Hindu Business Line", New Delhi; 17 May 2006

Kochi , May 16
The unprecedented increase in the price of natural
rubber over the past couple of months has severely hit
small industrial units using rubber as their main raw
material, according to All-India Rubber Industries
Association.

In a letter to the Union Commerce Minister, Mr Kamal
Nath, the association said that a majority of the
units were being closed down due to the high natural
rubber prices and scarcity of rubber.

The units that are working are running up losses
because they are functioning at 30-35 per cent of
their installed capacity, the association said, urging
the Minister to take steps to temporarily ban exports
of natural rubber from India.

Earlier, tyre manufacturers too had demanded the same,
saying that exports of natural rubber from the country
would further deplete stocks in the domestic market.

The Rubber Board has projected exports of 50,000
tonnes for the current fiscal year. Natural rubber is
ruling at Rs 95 a kg and is expected to cross Rs 100
in the coming weeks.

The association said the current market trend had
already disrupted the rubber industry and if the
Government wants to protect the interest of rubber
consuming sector, it should pass orders suspending
exports of rubber immediately.

The association also said growers and dealers are
resorting to hoarding of natural rubber. "In the past,
average stocks have lasted for two months' consumption
but now it is enough for just about a month's usage.
The shrinking stock position is adversely impacting
prices in the domestic market."




(Syed Rashid Ali, Karachi, Pakistan)

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