No takers for rubber!

Saturday, 22 October 2011 00:00 - - {{hitsCtrl.values.hits}}

By Cheranka Mendis

Tapping troubled times ahead, the local rubber industry suffered a setback with no takers at Thursday's auction.

The rubber industry, which stood as a pillar of strength for the falling tea industry, holding up the profits for the plantation companies which are currently suffering from low prices in the tea sector, Thursday faced a major setback with buyers refusing to sell rubber at the quoted prices.

Colombo Rubber Traders’ Association Chairman M.S. Rahim told the Daily FT that it was the first time in almost 50 years that such an incident had taken place, where the catalogued quantity had gone unsold and prices unquoted.

“Nothing was sold,” Rahim said. “The prices quoted by buyers were much lower than the average so far and as a result brokers refused to sell at the auction.”

The catalogued rubber quantities at the auction were 199.295 kg of crepe rubber, 27,225 kg of scrap rubber, 16,475 kg of skim crepe and 26,571 kg of RSS.

“No transaction has taken place,” he said. “It is the first time that there has been a situation where prices went unquoted on all grades.”

Even when a market situation is weak, you don’t withdraw rubber, he revealed, adding that “the prices were so low we assume that the principal companies told the brokers not to sell”.

Rahim added that the demand for rubber was dropping daily even in the world market due to the lack of demand for commodities. He stated that the Tokyo Rubber Auction, which is described as the ‘makers of market for Asia in rubber,’ had also experienced plummeting prices. “In September the average price at the Tokyo auction was Yen 350. At the last auction however the price has come down to Yen 275.” “There seems to be a panic situation in the market. If the market continues with the low prices as quoted currently, rubber would lose its place and become one of the other commodities in the market,” he noted, adding that given the low demand, the “local boom is now over”.