Pointing out that commodity futures could be the panacea for managing price risk ailing industries that are dependent on rubber, National Multi-Commodity Exchange of India Managing Director and CEO Anil Mishra on Friday said ever-rising rubber price was a matter of concern.
“Lesser carry-over inventory, not enough supply, extended rain and vagaries of weather in most producing countries have kept the rubber price high globally and there is no price drop in sight. The challenge for rubber user-industry is how to manage the cost of rubber the key raw material,” he said. Pressing for use of commodity futures market to control rubber prices, Mr. Mishra said commodity futures market had many types of stakeholders with different objectives; therefore they take different opposite and diverse decisions and give opportunity to the users to be able to buy at cheaper price.
He further pointed out that the regulator, Forward Markets Commission (FMC), had expertise to use various risk management tools such as daily price limit, initial margin, additional margin, special margin, and mark-to-market, position limits and penalties and uses all these tools effectively as was appropriately required. It monitors the trading live on line.
Stating that there was global tightness in availability and it was more so in India due to good growth in tyre sector demand, Mr. Mishra said tyre production in India in the first-half of this financial year (April-September 2010-11) increased 28 per cent while exports registered an increase of 18 per cent.
Production increased in all tyre segments while growth was negative in exports of truck/bus tyres, light commercial vehicle and tractor tyres, according to the latest data by the Automotive Tyre Manufacturers Association (ATMA).