August 22, 2006 (LBO) – Rubber prices in Sri Lanka have been dropping since July, following stiff competition from regional producers like Thailand and India. “Thailand being one of the biggest suppliers of rubber in the region has had better volumes from their crops, resulting in a drop in Sri Lanka’s rubber price,” Damitha Perera, Director, Rubber Department at Forbes & Walkers Commodity Brokers told LBO.
Prices fell for two months consecutively in July and August, with crepe rubber selling at 255 rupees a kilo and sheet rubber at 225 rupees a kilo, when trade closed on Tuesday.
Crepe rubber, which makes up bulk of Sri Lanka’s exports, is used to make latex products, shoe soles and pharmaceutical products such as saline tubes, catheters and hospital sheets.
About 35 percent of the Sri Lanka’s total production is sheet rubber, produced almost entirely by small holders, with demand driven entirely by local industries.
“Indian volumes coming into the market have also affected our market price,” Perera said, though prices are expected to stabilize at these levels with little fluctuation in the coming months.
Rubber prices boomed in the first two quarters this year, driven by strong buying from global markets, coupled with supply shortages from producer countries.
Rubber sold at an average of 184 rupees a kilo in the first quarter and 305 rupees a kilo in the second quarter this year, brokers say.
Sri Lanka produces 104.4 million kilos of rubber a year and the total area under cultivation is 116,000 hectares.