Colombo rubber auction prices crash by over 50% in six months

As the natural rubber auction prices have crashed by over 50 percent within six months despite high cost of production, the government plans to impose further strict controls on rubber imports in order to ensure a fair price for local rubber farmers during the key cropping season.

“Rubber auction prices have crashed. They have come down to Rs.450 from Rs.1050 a six months ago,” a leading planter told Mirror Business. 

According to the latest rubber auction held on January 31, the price of top latex crepe stood at Rs.500 after reaching Rs.1,000 in the second quarter of last year backed up by rupee devaluation and rising crude oil prices. 

Poor demand due to looming global recession, long holiday season in Europe, Chinese New Year holidays and declining crude oil prices have been cited as reasons for the declining rubber auction prices.

In December, the exports of finished rubber products declined by 21.1 percent YoY to US$ 71.2 million while crude rubber imports also fell by 74.4 percent YoY to US$.8.7 million.
According to the Central Bank, the poor demand for tyres and household rubber gloves are the main reasons for the sizeable decline in exports of finished rubber products.

Amid dwindling natural rubber prices, the government last October appointed a ministerial committee to look into the sharp decline in local rubber prices and excessive rubber imports. 
According to State Minister of Finance Ranjith Siyambalapitiya, the committee has decided to present a report to President Ranil Wickremesinghe recommending several actions to limit excessive rubber imports.

The committee claimed that several multinational companies continue to import rubber citing high quality of imported rubber. 

According to rubber brokers, producers of finished rubber products stockpiled rubber during September-November 2022 period. However, these stocks are expected to run out soon. Hence, industry stakeholders are optimistic that rubber auction prices would pick up in the coming weeks. Commenting on a stricter rubber imports regime, a planter said rubber auction prices are unlikely to be impacted by these measures unless a floor price is introduced.  He pointed out that the local rubber production, which was further impacted by Pestalotiopsis leaf fall fungal disease, is not sufficient to cater to the demand.