Rubber prices take a dip in new year

Sri Lanka’s rubber prices have seen a considerable decline since the beginning of the new year, an analysis of the Colombo rubber auction prices by Mirror Business showed.

The average prices for the main categories of Latex Crepe (1, 2, 3 and 4) in the last auction of December 2013 were within the range of Rs.295-407, while the average prices for the main categories of Ribbed Smoked Sheets (RSS) (1, 2, 3, 4 and 5) were within the range of Rs.310-340.

However, the auction prices throughout January 2014 for both Latex Crepe and RSS had been on the decline with the average price at the January 30, 2014 auction for Latex Crepe being within the range of Rs.247-310 and RSS 1 and 3 at Rs.275 and Rs.305, respectively, while RSS 2, 4 and 5 went unquoted.

Further, at yesterday’s auction, Latex Crepe fetched an average price in the range of Rs.235310 while RSS 2, 4 and 5 were unquoted with RSS 1 and 3 prices respectively at Rs.280 and Rs.271.

“The market has been slowing down largely due to the Chinese New Year and the holidays that followed but we can expect some stabilization towards the end of this month,” Colombo Rubber Traders’ Association (CRTA) Chairman M.S. Rahim told Mirror Business.

He further stated that although the prices are expected to turn around, a recovery to the same levels before the decline cannot be expected.

Rahim also noted that during the past two to three months there had been an increased supply in the local market and this too was a contributory factor towards the declining prices.

“January and February are usually cropping months and there are large stocks in the market. But since world prices are down, we have a situation of excess supply, which has also led to the falling prices,” he said, adding that it would take more than two to three months to get rid of this stock.

Meanwhile, Damitha Perera of Forbes and Walker stated that the market fundamentals had been against Sri Lanka and the stabilization of prices would be subject to market fundamentals.

He noted the slowing down of the Chinese economy, excess stocks in both the Chinese and Japanese markets, currency fluctuations particularly the Japanese yen and also the excess supply in the local market as some of the market fundamentals.

“One consolation is that we are heading into wintering and there is leaf fall as well. So, with that supply should stabilize and the prices too by the end of February,” he noted.