India Rubber Prices May Hit New High On Tight Supply, Firm Demand

  MUMBAI (Dow Jones)--India's natural rubber prices, which fell 23% from its peak last month, have started recovering
and may touch a new high in coming months on expectations of a slowdown in supplies and firm demand from tire makers,
analysts and traders said Wednesday.
  The most-traded RSS-4 (ribbed, smoked, sheets) grade rubber hit an all-time high of INR240.50 a kilogram in February,
but fell thereafter due to higher output. The price of RSS-4 variety declined to a five-month low of INR185/kg Monday
after prices crashed on the Tokyo Commodity Exchange following the earthquake and tsunami in Japan.
  However, a rebound in Asian rubber futures is helping Indian prices rise again and the most-traded variety is now at
INR201/kg. The benchmark August Tocom rubber settled 4.5% higher at Y369/kg, as investors covered short positions and
hunted for bargains.
  The Association of Natural Rubber Producing Countries said Tuesday global rubber demand won't be significantly
impacted by the earthquake in Japan last Friday.
  In India, prices may hit a new high in the next three to six months, said Anand James, chief analyst with Geojit
Comtrade Ltd.
  "We are moving into a dry season, where local production will be lower," he said.
  In India, the world's fourth-largest producer of natural rubber, the peak tapping season is between October and
February. Normally, rubber tapping slows down during the summer season as excess heat prevents growers from tapping the
latex from rubber trees.
  The country is the world's second-largest consumer of natural rubber and tire makers account for more than 60% of the
total consumption.
  Traders said supply has declined significantly in the local market as growers aren't selling at after the sharp fall
in prices.
  Daily arrivals have come down to about 100-150 tons, compared with 400-450 tons in January, said Biju John, a large
trader in Kottayam, a major trading hub in the southern Indian state of Kerala.
  The state-run Rubber Board has also lowered India's output estimate in the marketing year through March to 851,000
tons from its earlier forecast of 893,000 tons.