Natural rubber prices continued their upward trend, touching Rs.221 per kg in the Kottayam market on Monday, driven by a mix of domestic and global factors. Traders point to tightening supply conditions, extreme temperatures in key rubber growing regions, fluctuations in crude oil prices, and a sharp rise in international rubber prices, up by about Rs.25 per kg in Bangkok as key reasons behind the surge. According to George Valy, president of the Indian Rubber Dealers Federation, the ongoing tensions in West Asia are adding to concerns. Any escalation could disrupt the supply of critical imported inputs such as chemicals and synthetic rubber used by the consuming industry. Higher crude oil prices also buoy natural rubber as rates of synthetic rubber, derived from petroleum, surge in sync.

Production has also taken a hit due to rising temperatures in major growing regions. However, the situation has shown slight improvement with the onset of summer rains across parts of the Central Travancore belt. At the same time, farmers are increasingly holding back stocks in anticipation of better prices, encouraged by the strengthening global market. Santhosh Kumar, CEO of Harrisons Malayalam Ltd, said the ongoing West Asia tensions and the resultant socio-economic conditions have cast a shadow on the trade of various commodities. Natural rubber is no exception. The present lean season in NR, where production has dropped drastically, leading to poor availability of material and the complete cessation of synthetic rubber supply due to disruptions in trade and logistics, has again put pressure on supply, prompting a certain level of substitution towards natural rubber. This situation has led to a short term price spike. It is expected that the situation may take time to ease, both in terms of supply and the removal of bottlenecks, and that natural rubber prices could remain firm in the short term, he said.