There has been a sharp divergence between the international rubber prices and the domestic prices of the commodity. On one hand, the prices of rubber in global markets have dropped to eleven months low, the prices in the domestic market are hovering around eight-year highs.

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In the global markets, there are concerns over slowing demand from China. Automotive supply chain disruptions in the US has also impacted rubber demand.

Additionally, Japan has announced that it would widen the state of emergency to various other cities. This is also expected to dent the demand for the commodity, thus weighing on the prices.

Meanwhile, in the Indian markets, rubber prices are trading at around eight-year highs near Rs 180 per kg.

Around 75 percent of rubber in the Indian market comes from Kerala. The state has been tackling high COVID-19 cases and high monsoon which has impacted rubber production. The tyre companies are now expected to be depending on imports. So this is one of the factors that could play going forward.

Further, experts believe China would require 500,000 tonnes of rubber between August to December. The country produces only 115,000 tonnes of rubber and will have to import the rest from the international markets.

This is expected to support rubber prices going ahead, but until then the divergence perhaps could continue.

(Edited by : Ankit Gohel)