Highlights
 

• Field latex cross INR 200 (US$2.34) mark, sheet still short of it
   
• Over 40% of smallholders complete rainguarding as rains set in
   
• Compound rubber import worries farmers, traders
   

In a notable shift in India’s rubber market, latex prices are now overtaking sheet rubber, driven by a surge in demand from domestic non-tire auto and non-auto sector industries amid tightening supply. While tire manufacturers maintain guarded sheet rubber purchases, the sheet grade continues to command good prices. Meanwhile, in Kerala—India’s key rubber-producing state—farmers are actively engaged in rainguarding in preparation for the monsoon months ahead, to ensure a continued supply despite evolving market dynamics.

According to smallholder sources, over 40% of the farmers have already completed rainguarding in Kerala, while more of the ilk are speeding up the work on rainguarding as rains have started lashing the state ahead of monsoon schedule. The northern region of the state is lagging in rainguarding while farmers in the southern and eastern parts are happy over the Indian Rubber Board disbursing rainguarding subsidy arrears early this year which came as a shot in the arm for them to actively engage in rainguarding this season. Farmers in all regions have also started tapping now and those in Central and South Kerala are reporting good yields following good summer rains.

The farmers in the northeastern states are reporting intermittent rains, which are helpful for production. There is a steady yield during this February-June peak season. Though leaf diseases were reported last year, now there is no such threat. However, rainguarding activity remains limited in these areas

Tire makers keen to support market

Source: India Rubber Board and Helixtap Analytics

Tire manufacturers are wary of stepping back from purchases, lest it will trigger a sharp price decline. They fear that such a move could dishearten farmers, discouraging tapping and thereby impacting domestic supply — a crucial concern given the narrow price gap between domestic and international prices.

When factoring in import duties and associated costs, global rubber consignments are more expensive than domestic cargoes at current levels. As a result, continued procurement is essential for tire makers to maintain both short and long-term supply stability. These manufacturers are also backing the Indian Rubber Board’s efforts to boost domestic production.

What has surprised the farmers more is the demand for latex from the industries, mostly small-scale, in North India, which is driving up the latex prices in the domestic market. Analysts say more and more such units are now coming up in the northern part. The spot field latex prices hit the magical INR 200/kg (US$2.34) mark on May 14 when the RSS-4 prices trailed behind at INR 197/kg (US$2.31). On May 22, the field latex spot prices touched INR 210/kg (US$2.46) while the RSS-4 prices were at INR 198/kg. On May 27, RSS-4 prices were at INR 199/kg while field latex prices did not report change. For the past month, sheet rubber prices have moved in a narrow range of INR 196-199 while not crossing the INR 200/kg threshold. The Northeast prices are mostly INR 10/kg less than Kerala prices.     

Sources said that now more than 30% of the Indian rubber supply is lapped up by domestic non-tire auto and non-auto sectors, a significant shift over the past five years. This is partly due to the high tariff of 70% on latex imports, which makes imports untenable.

Interestingly, the major suppliers of latex are from the estate sector though smallholders too resort to latex selling in great measure when the latex prices spike. The largest estate entity in India, the Plantation Corporation Kerala Limited, in the government sector, takes advantage of the field latex prices along with another public sector firm, the Karnataka Forest Industries Corporation. Currently, smallholders are also making hay while the sun shines.

Compound rubber import significant

Meanwhile, the Indian farmers and traders are stepping up pressure on the Indian Government to curb the import of compound rubber which they feel is putting downward pressure on Indian domestic prices.

According to George Valy, president of the Indian Rubber Dealers Federation, an average 20,000 tons of compound rubber finds its way to the Indian market, imported by the tire makers at 0-5% duty from the ASEAN countries, while all NR imports invite a duty of 25%.

“Last financial year (April 1, 2024, to March 31, 2025), a total of 250,000 tons of compound rubber is estimated to have reached India from the Far East. This is up from 169,000 tons from the previous financial year. If this further goes up, it will have a debilitating effect on domestic prices and production,” said Valy.

Now the farmers and traders are demanding to up the import duty on compound rubber on par with Natural Rubber – at 25% - and bring it under the supervision and regulation of the Indian Rubber Board. Now the Rubber Board reports the data on compound rubber published by the Director General of Foreign Trade and has no control over its imports.

“Now there is no mechanism to measure the NR content in imported consignments of compound rubber which is used to their advantage by Indian importers, mostly Indian tire makers,” said Babu Joseph, general secretary of the National Consortium of Regional Federation of Rubber Producer Societies of India, the apex body of smallholders in India. Valy pointed out that already tire makers are provided duty relaxation in imports of NR against exports of tires, which mostly suffice their raw material import needs.