A weaker yen has pushed up international rubber prices while Indian prices are still moving in the lower range. This may rein in the imports, which have been on the rise in the last few months, to a certain extent. But international prices are expected to drop inthe long term as global supply is set to exceed demand.

The actively traded rubber contract for June delivery on the Tokyo Commodity Exchange increased to 307.8 yen per kg on Friday. It was in May 2012 that prices touched a high of 316 yen per kg before dropping. But industry analysts say the current fall is more due to the depreciation of the yen against the dollar rather than the supply-demand equation.

"This could be more of a correction phase. Prices could stabilise later," said Rajiv Budhraja, director general of Automotive Tyre Manufacturers＇ Association. Indian RSS-4 rubber prices were Rs 20 per kg lower than international spot prices at Rs 163 per kg by the end of week. The SMR 20 grade block rubber, equivalent to the Indian RSS-4 grade, mostly imported by tyre industry, is ruling at Rs 167 per kg.

Higher international prices may lead to a slowdown in the natural rubber imports at least for the time being. In the April-November period, natural rubber imports showed a 32% rise at 1,53,855 tonne over the same period in the previous year. But imports could be lower in December and January.

In November 2012, natural rubber imports reached 22,748 tonne. This could come down to 19,000 to 20,000 tonne by January, said a rubber dealer. Total natural rubber imports for 2012-13 are expected to rise 20-30% above the volume of 2,05,050 tonne in the previous year. Tyre industry sources say imported rubber is more suited for truck and bus radials because of superior quality.

Rising imports, peak harvest season and tepid consumption are keeping the Indian rubber prices stable. According to Rajiv Budhraja, demand is unlikely to pick up in the current financial year.