Rubber rues over cess hike

By Cheranka Mendis
The rubber industry is opposing a planned hike in cess on exports as the sector is amidst uncertainty owing to volatility in global markets.
Adverse implication against the move mooted by rubber products manufacturers had been communicated to Prime Minister D.M. Jayaratne last week.

“Last Thursday a delegation met him (Premier) to voice industry concerns. We told him about our worries over the cess increase as mentioned by Minister of Industry and Commerce Rishad Bathiudeen in Parliament,” Ceylon Rubber Traders’ Association (CRTA) Chairman M.S. Rahim told the Daily FT.
If the cess on exports is increased, it would be damaging he said, adding that the last revision saw a 300% increase to Rs. 12.
“We also requested the Prime Minister and the EDB to invite us for the Exporters’ Forum as they usually did. We were invited for all the forums before, but surprisingly we were left out from the last one where the rubber manufacturers are said to have asked the Minister for an increase in cess,” Rahim added.
In a related industry development after a disastrous week of auctions with no rubber sold last week, the market has shown signs of recovery with quantities been sold at Tuesday’s auction.
Rahim said that the market has picked up from the previous week and that rubber was sold as usual except for RSS rubber.

The auction on Tuesday saw 195,675 kgs of crepe rubber catalogued along with 22,250 kgs of scrap crepe, 23,725 kgs of skim rubber and 17,347 kgs of RSS. “Except for RSS the other varieties were sold off at the auction. Prices quoted for RSS was deemed unsatisfactory and below expectations of brokers,” he said. 
At the previous auction where all rubber went unquoted and unsold the catalogued rubber quantities were 199,295 kg of crepe rubber, 27,225 kg of scrap rubber, 16,475 kg of skim crepe and 26,571 kg of RSS.
On Tuesday, crepe rubber was sold at an average price of Rs. 489 per kg with prices being quoted at a range between Rs. 470 and Rs. 489. Scrap crepe was sold at an average price of Rs.388 and skim rubber at an average Rs. 378 per kg.
Rahim stated that the market had picked up along with the improvement seen at the Tokyo Rubber Auction. The market however is yo-yoing, he noted.
“Reports show that business is growing bad in the world. The Tokyo market, which is a terminal market where the trading takes place on paper, ‘paper rubber’ as we call it, has been fluctuating,” he said. “Sri Lanka is a small country sandwiched between the giants. The best we can do is lie low for a while.”
Projecting how the next few auctions may go, Rahim said that after the quantities of rubber are sold, there will be a major slow down in the market. “Since the quantities went unsold last week as well, there will be lots to sell. When that is finished, the market will slow down.”
The rainy weather has not affected the market yet due to the same reason of excess quantity, he said.