By Chandeepa Wettasinghe
Rubber prices in the Colombo Auction have bounced back in recent weeks with the inclement weather suppressing supply.
Data from Forbes & Walker Commodity Brokers (Pvt) Ltd and government sources showed that of the latex range, Latex Crepe No. 1X averaged Rs. 345 on October 8, compared to Rs.295 year-on-year (yoy) and Rs. 334 on October 1 and Latex Crepe No. 1 averaged Rs. 342 against Rs. 292.50 yoy and Rs. 329.50 on October 1.
Sri Lanka is the largest producer of Latex Crepe rubber. However, just 45,875 kilos of Latex Crepe were offered on October 8, falling from 77,775 kilos on September 22 and 88,550 kilos on September 8.
‘‘There is hardly any rubber because of the heavy rain. Contracts have defaulted, and there is no rubber to buy
“There is hardly any rubber because of the heavy rain. Contracts have defaulted, and there is no rubber to buy,” Colombo Rubber Traders Association Chairman M. S. Rahim told Mirror Business.
The Scrap Crepe (Brown) No. 1 averaged Rs. 193 on October 8 against Rs. 204.63 yoy and Rs. 192.50 on September 29, while the Flat Bark averaged Rs. 165 and Skim Crepe averaged Rs. 172.50 on October 1 compared to Rs. 162.5 yoy and Rs. 165 on September 22.
Of the globally popular Ribbed Smoked Sheet (RSS) products, RSS 1 has not been sold in meaningful quantities at most auction sessions since September to derive a qualified price except on October 1 when it averaged Rs. 243 against Rs. 294.50 yoy.
Just 2,075 kilos of RSS rubber were offered on October 8 and 707 kilos on September 22.
Rahim said that most rubber is being bought for domestic use, and exporters are importing rubber for production and re-export; meaning only production and labour costs are retained, with the raw material earnings flowing out of the country to Vietnam, Thailand, etc.
“Those who aren’t importing rubber are getting walloped. RSS 3 is being imported for Rs. 190,” he said.
RSS 3 in the local market is around Rs. 235. The global prices have dropped due to a continuing oversupply from the largest rubber producers in the world centred in South East Asia, and the fall in oil prices has resulted in cheaper synthetic rubber which substitutes natural rubber to a certain extent.