Overall view of the rubber industry 2010

Colombo Rubber Traders Association (CRTA) Chairman M.S. Rahim in his report stated that in 2010 the industry experienced all round growth in production even amidst a distinct shortage of natural rubber supply to international markets.

“With the sustained development in China, India and all of Asia and the return of the Western countries to the market, demand increased tremendously. High oil prices too helped the market to rise steadily throughout the year,” Rahim said.

 

Production

Production in Sri Lanka increased by a further 12% to reach 153,000 tonnes in 2010. The small holder sector consisting of 125,000 cultivators helped the achievement by increasing their contribution by 54% of the total production.

It is hoped that some of the profits will be ploughed back into the industry to further increase their yield in the future. “Plantation companies which produced the balance 46% contributed by producing increased quantities of high quality rubber consisting of latex, crepe, sole crepe and liquid lead,” he said.

He acknowledged that the notable feature in 2010 was the increase of latex production by 50% from the previous year to reach 61%, which consists of 39.9% of the total production. “This is the first time latex production was higher than RSS production, which ended at 38.7%.”

As the premium range for high quality rubber was in short supply, there was great demand for these grades in local auctions as well as private ones. He noted that Sri Lanka was the only producer of latex rubber in the world today.

“Credit must be given to the management companies and the planters who have maintained high standards of efficiency, subscribed to good agricultural practices, used the prescribed application of fertiliser and employed wider coverage of rain guards on the estates to produce high quality premium rubber. These forms of efficiencies have increased productivity, which is now paying handsome dividends. We are looking forward to a continuation of this in the future,” Rahim assured.

Prices

The average price for all grades of rubber moved sharply higher than the previous year. Rahim noted that RSS1 was Rs. 403 per kg showing an increase of 91% while latex crepe No. 1 increased by 113% to Rs. 453 at the end of the year.

“It was not only the producers who made money in rising prices. Exporters, dealers and estate owners stocking the sales for future did very well. Most of the speculators ended up with handsome profits.”

Yet another feature was seen in the local stock market where shares of rubber quoted plantation companies attracted attention. Shares were quickly snapped up by market speculators boosting prices rapidly in the knowledge that the steady rise of prices in the future plantation companies would ensure they would become financially stronger.

“Investors who knew nothing of rubber also joined the band wagon and amassed high profits,” the Chairman claimed. Due to such movements in the stock market, the rubber industry for the first time has indirect confidence and support from the general public involving millions of rupees on a daily basis.

“Exporters too have found an alternative source of hedging with shares when supplies of rubber were in short supply.”

Exports

With the increase in domestic consumption last year, exports recorded a decline of 8% in raw rubber to reach 51.5000 tonnes as against 55.9900 tonnes in 2009. Domestic consumption increased by 26% with value addition and net earnings enhanced in the national interest.

Exchange rates

“Due to the strengthening of the rupee against the dollar, exporters had to market it on numbers quoted in comparison to other producing countries. Exports have performed well by marketing our products to traditional markets, thereby obtaining much higher foreign exchange earnings even through there was a decline of the quantity of rubber exported,” Rahim said.

At the AGM, Rahim was re-elected as CRTA Chairman uncontested for the coming year.