Tyre-makers seek ban on rubber futures

Press Trust of India, March 29, 2010 (New Delhi)

Hit by the steep rise in natural rubber prices, the Automotive Tyre Manufacturers Association has urged Prime Minister Manmohan Singh to ban futures trading of the commodity and allow duty-free import of at least 2,00,000 tonne of the raw material.

The industry body in a letter to the Prime Minister, also urged either reduction in import duty on natural rubber to 7.5 per cent from existing 20 per cent or doubling of customs duty on imported tyre to 20 per cent to help domestic manufacturers.

"Rubber growers are hoarding and trading more and more in speculation, and thereby increasing prices. There is also a big demand-supply gap," ATMA chairman Neeraj Kanwar said.

In his letter to Singh on March 26, Kanwar urged the PM to ban futures trading till "volatility in natural rubber prices is contained and availability situation improves". He said domestic tyre firms are having a tough time and their margins are under pressure due to rise in rubber prices.

Prices have surged by over 60 per cent in the last seven months and hovering around Rs 155 a kg at present, which was more than double the average price in March, 2009. Market reports hint that the prices may rise further to Rs 175-180 a kg in the near future.

"Along with the rising rubber prices, availability is also a matter of serious concern, and so tyre manufacturers should be allowed duty-free import of at least 2,00,000 tonne on a priority basis," he said.

In his letter, Kanwar said, "price increase of Re 1 translates into an additional financial burden of Rs 60 crore for tyre industry."

Stating that tyre manufacturers will have to pass on the additional burden to consumers in coming days, he said, "the industry would want to increase tyre prices by 20-25 per cent immediately," Kanwar said, and recalled that there was a 5 per cent hike in January, followed by 2 per cent in February.

"Another round of hike of 2 per cent will happen in April," Kanwar informed.

With cheap imports from China hurting domestic firms, the association wants to see import duty on tyres increased to 20 per cent from the present 10 per cent.

"China has already taken immediate and effective steps by abolishing customs duty on compound rubber imports and reduction in duty on natural rubber imports, thereby helping its tyre and rubber goods manufacturing industry maintain competitiveness," the letter said.

Meanwhile, the demand for tyres from the vehicle makers are gradually increasing as the domestic market has rebounded with record sales. Kanwar said under the prevailing circumstances, the tyre-makers would find it difficult to meet the demand of the booming auto industry.

(NDTV) http://beta.profit.ndtv.com/news/show/tyre-makers-seek-ban-on-rubber-futures-32637

India rubber seen hitting new record peaks

OUTLOOK-India rubber seen hitting new record peaks

MUMBAI, March 29 (Reuters) - Indian rubber prices are likely to set new record highs this week on firm global markets and a shortfall in production due to a drought-like situation in the biggest growing region, traders and analysts said on Monday.

"Summer is very hot this year and it is hampering tapping process," said V. N. Viswamohan Prabhu, a spot trader based in Kochi in southern Kerala state.

The state is the biggest producer of the rubber and currently experiencing drought like situation in many districts, its revenue minister told the state assembly earlier this month.

The key Tokyo rubber futures contract hit an 18-month high on Monday, as firmer oil prices and tight supply underpinned sentiment which turned positive after prices topped major resistance of 300 yen last week. See [ID:nTOE62S078]

The benchmark April contract NMRUJ0 on the National Multi-Commodity Exchange (NMCE) hit a high of 15,935 rupees per 100 kg on Monday, the highest level for near-month contract since futures trade was introduced in 2003.

Spot price of the most traded RSS-4 (ribbed smoked sheet) rubber hit a record high of 15,550 rupees in Kottayam, Kerala, as per data compiled by the Rubber Board. The spot price has risen by nearly ten percent so far in March.

"Despite higher prices tyre markers are still buying. Market may set new high this week," Prabhu said.

Usually rubber supplies shrink in summer season in India. In 2009/10, output in the world's fourth biggest producer is expected to drop 4 percent to 830,000 tonnes from 864,500 tonnes a year ago

Spot rubber gains on short supply

Kottayam, March 30

Physical rubber prices made further gains on Tuesday. The market opened better quoting sheet rubber at Rs 158 a kg but the grade shed the morning gains partially to close at Rs 157 (156) a kg following the declines in domestic futures on late trades. Major manufacturers continued to remain inactive prior to the financial year closing but the market made all-round gains amidst short supply.

Futures weak

The futures weakened with April dropping to Rs 156.57 (158.88), May to Rs 159.84 (161.91), June to Rs 159.60 (161.88) and July to Rs 158.71 (160.22) a kg for RSS 4 on National Multi Commodity Exchange (NMCE). RSS 3 improved with the April futures rising to ¥331.8 (¥331.7) and May to ¥327.8 (¥327.1), while the June futures slipped to ¥319.4 (¥320.3) and July to ¥313.3 (¥315.8) a kg during the day session on Tokyo Commodity Exchange. RSS 3 improved to Rs 157.52 (157.06) a kg on Singapore Commodity Exchange (SICOM). The grade firmed up to Rs 158.05 (156.85) a kg at Bangkok.

Spot prices were (Rs/kg): RSS-4: 157 (156); RSS-5: 155.50 (154.50); ungraded: 154 (153.50); ISNR 20: 154 (153) and latex 60 per cent: 100 (100).

Tyre makers seek PM’s help to cool rubber prices

Thiruvananthapuram: Worried over natural rubber price jumping to Rs 155 a kg, industry outfit the Automotive Tyre manufacturers Association has sought the intervention of Prime Minister Manmohan Singh to ease natural rubber availability in the country. In a memorandum to Prime Minister, ATMA has sought zero-duty rubber imports and ban on futures trading. (FE)

http://www.financialexpress.com/news/Tyre-makers-seek-PM-s-help-to-cool-rubber-prices/597768/

Asian physical rubber prices - March 31

BANGKOK, March 31 - Asian physical rubber prices were higher on Wednesday, supported by tight supply and rising futures prices on the Tokyo Commodity Exchange, dealers said.

The benchmark Thai rubber price was offered at a record high of $3.52 per kg, breaking the previous record of $3.50 set this week.

Rubber reached levels around $3.30 per kg 58 years ago at the time of the Korean War. It went above that level in March this year and has continued to move higher as demamd is strong and supply is falling for seasonal reasons. (Alibaba.com) http://news.alibaba.com/article/detail/chemical/100270345-1-table-asian-physical-rubber-prices--.html

Spot rubber stretches its gains

Spot rubber stretches its gains

Kottayam, March 29

The rubber prices explored further highs on Monday. Sharp gains in the Japanese markets and positive reports from the remaining global trendsetters inspired the domestic players to join the buyers queue. In spot, sheet rubber increased to Rs 156 from Rs 154.50 a kg on fresh buying and short covering. The market made all-round gains lacking quantity sellers though major manufacturers were totally inactive prior to the financial year closing as usual.

Futures improve

RSS 4 improved with the April futures rising to Rs.158.85 (157.67), May to Rs 161.94 (160.61), June to Rs 161.95 (160.38) and July to Rs 160.11 (159.27) a kg on National Multi Commodity Exchange (NMCE).

RSS 3 firmed up sharply at its April futures to ¥331.7 (¥323.3) (Rs 160.40), May to ¥327.1 (¥319), June to ¥320.3 (¥313.1), July to ¥315.8 (¥309), August to ¥313 (¥306.1) and September to ¥312 (¥304) a kg during the day session on Tokyo Commodity Exchange (TOCOM). The April futures slipped to ¥330 (Rs 160.36), May to ¥326.9, June to ¥319.2, July to ¥314.5, August to ¥311.9 and September to ¥310.5 a kg during the night session. RSS 3 improved to Rs 157.06 (155.39) a kg on Singapore Commodity Exchange (SICOM). Its spot closed at Rs 156.85 (155.58) a kg at Bangkok.

Spot prices were (Rs/kg): RSS-4: 156 (154.50); RSS-5: 154.50 (153.50); ungraded: 153.50 (152); ISNR 20: 153.00 (151.50) and latex 60 per cent: 100 (100).

Rubber heading towards 160per kg.

Rubber heading towards 160per kg.

It appears that rubber is surely going to cross 160 per kg very soon, world market sky rocketing with production fall expectations from all major growing countries and huge demand by superpowers like China and INDIA. At present IST 10.25a.m tokyo is +7.4Y

Go to this link for current position:

http://www.tocom.or.jp/souba/rubber/index.html

Rubber Rises to 18-Month High as Thai Supply Drops, Oil Climbs

March 29 (Bloomberg) -- Rubber advanced to the highest level since September 2008 as supply in Thailand, the world’s largest exporter, declined and an increase in oil prices boosted the cost of making rival synthetic products used in tires.

Futures in Tokyo rose as high as 312.3 yen per kilogram ($3,373 a metric ton) after last week rallying 5.9 percent. The price has advanced 13 percent this year.

Shippers in Thailand raised the price of natural rubber for overseas buyers by 3 percent to reflect declining supply, said Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo. Thailand is in the annual low-output season, known as wintering, which runs from February to April.

“Investors bought rubber futures as they were undervalued when compared with physical prices,” Shigemoto said by phone today.

Rubber for September delivery, the most-active contract, gained 1.9 percent to settle at 312 yen on the Tokyo Commodity Exchange.

Thai shippers raised offers for so-called RSS-3 grade rubber for May shipment to $3.40 a kilogram from $3.30 on March 25, Shigemoto said. During wintering rubber trees shed their leaves and latex production slows.

Futures also increased as higher oil prices raised the appeal of natural rubber as an alternative to synthetic products made from petroleum, he said.

Oil Climbs

Crude oil climbed from a two-week low on speculation that the economic recovery will boost fuel demand, and as receding concerns over Greece’s debt crisis bolstered the euro against the dollar.

The May-delivery contract rose 0.8 percent to $80.61 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 3:39 p.m. Tokyo time.

Rubber for September delivery rose as much as 1.6 percent to 25,185 yuan ($3,689) a ton on the Shanghai Futures Exchange, the highest level since March 1. It traded at 25,050 yuan at 2:45 p.m. local time.

Natural rubber inventories monitored by the Shanghai bourse plunged 24,663 tons to 74,220 tons, based on a survey of 10 warehouses, the exchange said March 26. That was the lowest level since August 2009.

Spot rubber rules steady

Spot rubber rules steady

Kottayam, March 27

Spot rubber finished almost steady on Saturday. The session was rather cool following the widespread rains on Friday night as traders preferred to stay back waiting for a definite direction in the overseas markets after the weekend holidays. A dull closing in the domestic rubber futures also kept the sentiments under pressure and sheet rubber closed flat at Rs 154.50 a kg amidst comparatively weak volumes.

Futures slip

RSS 4 slipped at its April futures to Rs 157.67 (158.13), May to Rs 160.61 (160.98), June to Rs 160.38 (160.73) and July to Rs 159.27 (159.99) a kg on National Multi Commodity Exchange (NMCE).

Spot prices were (Rs/kg): RSS-4: 154.50 (154.50); RSS-5: 153.50 (153.50); ungraded: 152 (151.50); ISNR 20: 151.50 (151.50) and latex 60 per cent: 100 (100).

Rubber Rises to Highest Since Sept. 2008 on Indonesia Output

BusiFacebook

March 26 (Bloomberg) -- Rubber jumped to the highest price since September 2008 after an Indonesian producers’ group said that output may decline this year.

Futures in Tokyo rose as much as 2.9 percent, extending yesterday’s 3.3 percent gain after the Rubber Association of Indonesia said on March 24 that output in the second-largest producer may drop to 2 million metric tons this year, from 2.4 million tons in 2009.

“Given Indonesia’s lower output forecast earlier this week, it’s hard to bet on a price decline,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone. The forecast “sent futures in Shanghai and Tokyo higher yesterday” amid increased demand for the commodity used in tires, especially from China, he said.

Rubber for August delivery jumped 2.9 percent on the Tokyo Commodity Exchange to 306.1 yen, the highest closing price since Sept. 9, 2008. The most-active contract climbed 5.9 percent this week, the first weekly gain in four.

Output from Indonesia may slump this year if unfavorable weather persists into the second half after rains disrupted first-quarter tapping, Asril Sutan Amir, chairman of the Indonesian industry group, said on March 24.

In the cash market, shippers in Thailand, the world’s largest producer and exporter, offered RSS-3 grade rubber for May shipment at $3.32 a kilogram, from $3.30 yesterday, according to Takaki Shigemoto, an analyst at research and investment company JSC Corp.

Production declines in Thailand from February to April, when rubber trees shed leaves and latex production slows during a period known as wintering.

Rubber for September delivery advanced for a third day on the Shanghai Futures Exchange, settled 0.7 percent higher at 24,855 yuan ($3,641) a ton after touching 25,025 yuan, the highest since March 1.

Global natural rubber firm on tight supplies

Spurt in demand and supply woes push up prices.

Up and high: Large scale capacity addition by the Indian auto tyre industry may accelerate demand for natural rubber.

Kochi, March 26

Global natural rubber prices continue to remain firm mainly on account of a sharp spurt in demand and heightened imports by China, India and Malaysia.

Preliminary estimates of import and consumption of rubber in January and February by the Association of Natural Rubber Producing Countries (ANRPC) reveal substantial growth over the previous year.

Figures released by the ANRPC show that imports by China surged 63 per cent for natural rubber and 118 per cent for compound rubber in the first two months of this year. And, more than 95 per cent of the imported compound rubber consists of natural rubber.

In Malaysia, natural rubber import rose 34 per cent. During the same period, India posted a 17 per cent growth in consumption of natural rubber and over 100 per cent growth in imports. The ANRPC also pointed out that large scale capacity addition taking place in the Indian auto tyre industry indicate the possibility of a further acceleration in natural rubber demand.

More than 45 per cent of the global consumption of natural rubber is from China, India and Malaysia. While these three are major consuming countries in the ANRPC, China and India are considered the pace setters of global demand and price trends.

Optimistic estimates

While member countries of ANRPC account for over 94 per cent of global rubber production, estimates provided by their governments indicate that the current year's production is expected to surge by six per cent. And even this estimate can be termed optimistic since the forecasts are based on favourable weather conditions prevailing over much of the rubber growing belts of the world. Already, reports of moisture stress and drought-like conditions emanate from Thailand and China that could undermine output expectations.

The ANRPC also reported that a 16.8 per cent rise in output estimate by Malaysia is also on the optimistic side given the progressive decline in tapped area during the past six years. A large extent of existing yielding trees in all major producing countries were planted during the eighties and they have now reached the declining phase in production. Therefore, the ANRPC said that the age of composition of the existing yielding area is quite unfavourable for an improvement in yield.

The buoyant demand, uncertainty in supply, weaker dollar and rise in crude oil prices have been supporting natural rubber prices. In addition, the fall in the Japanese yen since March 7 have also been supportive to the natural rubber markets. Natural rubber prices firmed up in all major global markets in Kuala Lumpur, Bangkok, Singapore and Kottayam during the second week of this month.

Rubber gains on global cues

Kottayam, March 26

Physical rubber prices scaled further highs on Friday. Sharp gains in the international rubber futures catalysed the domestic mood and it made all-round gains mainly on speculative buying and short covering.

According to observers, major manufacturers were still inactive though supply concerns haunted the market even at higher levels. Sheet rubber moved up to Rs 154.50 from Rs 153.50 a kg with comparatively dull volumes. The undercurrent was extremely bullish. The April futures for RSS 4 improved toRs 158.25 (156.96), May to Rs 160.90 (159.12), June toRs 160.60 (158.62) and July to Rs 160 (158.63) a kg on National Multi Commodity Exchange.

RSS 3 flared up at its April futures to ¥323.3 (311.3), May to ¥319 (306.4), June to ¥313.1 (303.3), July to ¥309 (300), August to ¥306.1 (297.6) and September to ¥304 (300) a kg during the day session on Tokyo Commodity Exchange.The April futures closed at ¥321.1, May at ¥319, June at ¥314.8, July at ¥309.7, August at ¥307.3 and September at ¥305 a kg during the night session.

RSS 3 firmed up sharply to Rs 155.39 (151.92) a kg on Singapore Commodity Exchange. The grade gained further to Rs 155.58 (152.55) a kg at Bangkok. Spot prices (Rs/kg) were: RSS-4: 154.50 (153.50); RSS-5: 153.50 (152.50); Ungraded: 151.50 (151); ISNR 20: 151.50 (151) and Latex 60 per cent: 100 (100).

Rubber Tappers Bank to be launched

Staff Reporter

The first of the banks will be opened at Poothrukka

KOTTAYAM: The Rubber Board will launch a Rubber Tappers Bank as part of its efforts to find a solution to the problem of acute scarcity of rubber tappers.

The first of the banks, under the auspices of rubber producers' societies (RPS) will be opened at Poothrukka RPS, near Kolencherry, in Ernakulam district an March 29, a press note said.

Chairman Sajen Peter will inaugurate the new venture at a function to be chaired by vice-chairman Siby Monippally.

Rubber Tappers Banks have been envisaged as self-help groups (SHGs) of 20 to 30 trained tappers working under the RPS. Farmers will get the service of skilled tappers on payment of fee. .

The bank will also pay incentives to the tapper for additional produce realised by him by way of tapping. They will get additional

financial advantage such as insurance coverage and savings under the Group Life Insurance-cum-Terminal Benefit Scheme of the Board.

They can also enrol for the Personal Accident Insurance Scheme under the Price Security Fund Trust. The Board will provide them uniform and monthly allowance for maintenance of their implements, the press note said.

MY VIEW

Kottayam yesterday midnight got its first summer rains which lasted for nearly four hours.

Rubber steady as traders turn inactive

Rubber steady as traders turn inactive

Kottayam, March 25

Spot rubber was steady on Thursday. The sentiments remained neutral as there were no quantity sellers or buyers on either side to keep the market live during the session.

According to observers, sharp gains in the Japanese markets helped the prices to sustain at current levels though major manufacturers continued to stay inactive. Sheet rubber closed unchanged at Rs 153.50 a kg amidst scattered transactions. The volumes were low. April futures firmed up marginally to Rs 156.75 (156.34), May to Rs 158.92 (158.24), June to Rs 158.50 (157.71) and July to Rs 158.65 (157.84) a kgfor RSS 4 on National Multi Commodity Exchange. March futures for RSS 3 expired at ¥308.5 (303.9) while the April futures flared up to ¥311.3 (300.5), May to ¥306.4 (298.4), June to ¥303.3 (295.5), July to ¥300 (291.4) and August to ¥297.6 (288) a kg during the day session on Tokyo Commodity Exchange. April futures improved further to ¥311.7, May to ¥308.7, June to ¥304.5, July to ¥301.5 and August to ¥299.4 on late trades. RSS 3 closed firm at Rs 151.92 (150.07) a kg on Singapore Commodity Exchange. The grade improved to Rs 152.55 (151.90) a kg at Bangkok.

Spot rubber prices (Rs/kg) were: RSS-4: 153.50 (153.50); RSS-5: 152.50 (152.50); Ungraded: 151 (151); ISNR 20: 151 (151) and Latex 60 per cent: 100 (100).

Rubber Surges After Indonesia Says Output May Drop, Yen Weakens

March 25 (Bloomberg) -- Rubber surged after an Indonesian producers’ group warned that output may decline this year and a weakening of the Japanese currency raised the appeal of yen- based contracts for the commodity used to make tires.

Futures in Tokyo gained as much as 3.4 percent, matching the high set on March 9. The price peaked this year at 306 yen per kilogram ($3,332 a metric ton) on Jan. 15 on optimism that the global economic recovery will boost demand.

Output from Indonesia, the second-largest producer, may drop to 2 million tons this year from 2.4 million in 2009, the Rubber Association of Indonesia said. The yen fell to a two- month low against the dollar yesterday on speculation the European Union will fail to agree to measures to help Greece tackle its fiscal deficit at a meeting starting today.

“Futures gained because of a weaker yen and declining supply from Asian producers,” Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo, said today by phone.

Rubber for August delivery gained as much as 9.9 yen to 297.9 yen per kilogram on the Tokyo Commodity Exchange before settling at 297.6 yen.

Output from Indonesia may slump this year if unfavorable weather persists into the second half after rains disrupted first-quarter tapping, Asril Sutan Amir, chairman of the Rubber Association of Indonesia, said in an interview late yesterday.

Malaysian Output

Production last year in Malaysia shrank 20 percent to 860,000 tons as heavy rainfall hurt tapping, Bank Negara Malaysia said yesterday in a report, confirming earlier data.

Malaysian output this year may rebound 17 percent to 1 million tons, Minister for Plantation Industries and Commodities Bernard Dompok said in an e-mail earlier this month.

In the cash market, shippers in Thailand, the world’s largest producer and exporter, offered RSS-3 grade rubber for May shipment at $3.30 a kilogram today, unchanged from yesterday, Shigemoto said. The price increased from $3.27 on March 15 as output declined amid the low production season, he added.

During that period, known as wintering, rubber trees shed their leaves and latex production slows. In Thailand, the season lasts from February to April.

Rubber for September delivery advanced 2.4 percent to settle at 24,230 yuan ($3,549) a ton on the Shanghai Futures Exchange. Earlier, the price gained to 24,780 yuan, the highest level since March 8.

The Japanese currency was at 91.85 per dollar at 4:29 p.m. in Tokyo after falling to 92.40 yesterday, the weakest level since Jan. 12.

Tyre industry seeks duty-free import of natural rubber

Tyre industry seeks duty-free import of natural rubber

Mr K. M. Mammen

Chennai, March 24

The tyre industry, the largest consumer of natural rubber, has urged the Centre to allow duty-free import of at least two lakh tonnes of natural rubber on a priority basis, preferably through a Government agency.

It has also asked for a differential customs duty structure allowing imports at a lower duty – about 7.5 per cent – to facilitate imports during the lean months of natural rubber production.

According to Mr K.M. Mammen, Chairman and Managing Director, MRF Ltd, in case rubber prices increase above a certain level – say, Rs 90 a kg – the customs duty on natural rubber should be on a fixed basis, instead of an ad valorem structure. For, when natural rubber prices go up, consumers not only have to pay the increased price but also shell out more due to the ad valorem duty. When natural rubber costs Rs 75 a kg, the import duty at 20 per cent ad valorem works out to Rs 15 a kg, but when the price increases to Rs 150 a kg, the incidence of customs duty doubles to Rs 30 a kg.

Such a change in tariff has been introduced in China, according to Mr Mammen, to make its domestic tyre and rubber producing interests more competitive and viable.

Widening gap

The tyre industry's demand for easing imports on natural rubber stems from the widening gap between domestic production of natural rubber and its consumption, and also to take care of consumption during the lean rubber production months of March-August.

According to Mr Mammen, the tyre industry is raw material-intensive. Natural rubber is the single largest raw material for tyre production and accounts for 42 per cent of raw material cost. The tyre sector accounts for 62 per cent of total domestic natural rubber production and others – footwear, rubber parts for auto components and gloves – the balance.

Rising consumption

Mr Mammen said that domestic rubber production had failed to keep pace with the rising trend in consumption, especially in the recent years. For instance, he said, rubber production was 825,345 tonnes in 2007-08 when consumption was 861,455 tonnes.

In 2009-10, production was estimated at 840,000 tonnes and consumption 931,000 tonnes; and for 2010-11, the production was projected to grow to 901,680 tonnes while consumption would increase to 986,860 tonnes.

In view of the widening gap between production and consumption and to take care of consumption during the lean production months, rubber consumers have no option but to import. However, Mr Mammen said the inverted duty structure was a restrictive factor and an anomaly that had remained unaddressed for some time. In 1996-97, the peak rate on non-agricultural goods was 50 per cent, on tyres 50 per cent and on natural rubber 20 per cent. In 2010-11, this had become 10 per cent each on non-agricultural goods and tyres, while it remained 20 per cent on natural rubber.

The inadequate production of rubber and prohibitive imports resulted in high cost of key raw material for tyre production, had an adverse impact on tyre production with resultant uncertainties on tyre supplies to vehicle manufacturers, and encouraged import of finished products such as tyres despite there being adequate domestic capacity, he said.

High speculation pushes up rubber prices

Heavy futures trading, the key reason.

---

Demand for rubber in the spot market will not wane as long as the futures prices remain at very high levels, offering good margins for traders

---

Kochi, March 24

Despite the country having adequate rubber stocks of 2.69 lakh tonnes (lt), prices continued their upward march, crossing the record level of Rs 155/kg earlier in the week.

Even as the prices continued to reign at all-time highs, what was surprising was that there was a fair amount of trading, Mr N. Radhakrishnan, former President of the Cochin Rubber Merchants Association, said.

Amongst other reasons, the current spell of price rise can be attributed to speculators, sources in the trade said.

They pointed out that at the end of January the country had rubber stocks of 2.87 lt. Of this, the growers were supposed to have been holding on to stocks of 1.26 lt, processors held 30,000 tonnes, dealers had 65,000 tonnes, the tyre industry 50,000 tonnes and other rubber using industry had 16,000 tonnes.

The total rubber stock in the country is reported to have dipped marginally to 2.69 lt in February.

Surprising rise

While the country still has adequate stocks, the sharp rise in prices is surprising.

Although the traders said that there could be a fair amount of exaggeration in the stock held by the farmers, they said the stock held by the processors, dealers, tyre and other rubber consuming industry would be far more authentic, as they had to file returns of the stock held by them, which the growers do not have to.

Even accounting for exaggeration of the rubber stocks held by the growers, the outstanding stocks should be well over two lakh tonnes – sufficient to meet the immediate needs of the country.

It is in this background that the role of speculators cannot be discounted, the rubber traders warned. They said the demand for rubber in the spot market will not wane as long as the futures prices remain at very high levels, offering good margins for the traders. As long as the price differentials remain pronounced, the futures trader would be induced to buy and stock in the spot market to undertake delivery trade in the futures markets, Mr Radhakrishnan said. This, he said, was the most likely reason why there was fair amount of demand at the current high levels.

But the trend seems to be reversing with futures prices closing weak on Monday The arrivals are also likely to pick up in the coming months as the winter season of low production and availability of the past couple of months is now more or less behind us, the sources added.

WORLD RUBBER NEWS:

Rubber Output May Decline in Indonesia on Weather, Group Says

March 24 (Bloomberg) -- Rubber output from Indonesia, the world’s second-largest producer, may decline this year if unfavorable weather persists into the second half after rains disrupted first-quarter tapping, an industry association said.

Production may decline to 2 million metric tons in 2010, Asril Sutan Amir, the chairman of the Rubber Association of Indonesia, said today by phone. Amir had forecast in December that Indonesia may produce 2.5 million tons this year, up from 2.4 million tons in 2009.

Lower supplies from Indonesia may help to further support the price of rubber, which has advanced more than 90 percent in the past year on expectations that the global economic recovery may boost demand for tires and gloves. Most of the Asian nation’s supply is grown on the island of Sumatra.

“It’s been raining almost every day since February in Sumatra, forcing farmers to reduce tapping,” Amir said from Jakarta, the capital. “Even if the rains happen just in the morning, we skip tapping for the entire day.”

Rubber for August-delivery on the Tokyo Commodity Exchange was little changed at 288.8 yen a kilogram ($ 3,190 a metric ton) at 11:40 a.m. Jakarta time. Thailand is the biggest producer of the commodity and Malaysia is third.

“This is the impact of climate change,” said Amir, whose association represents state-owned and private plantations, as well as processors, exporters and traders. The start of the dry season may be delayed north of the equator, which may hurt rubber production in Thailand and Malaysia, he said.

Heavy rains and storms were forecast for the three days from March 23 in central, southern and western Sumatra, the Meteorological, Climatology and Geophysics Agency said March 22 in a second alert this month. The first was issued on March 11.

Malaysia and Thailand lie to the north of the equator, which crosses Indonesia’s Sumatra.

Rubber prices turn weak

Kottayam, March 24

The physical rubber prices turned weak on Wednesday. The market appeared to be moving into a corrective phase as the domestic rubber futures slipped further though there has been no visible selling pressure in main marketing centres. Sheet rubber weakened to Rs 153.50 from Rs 154 a kg on buyer resistance. The market made all-round declines except latex 60 per cent which closed unchanged on comparatively better demand.

Futures decline

The April futures for RSS 4 weakened to Rs 156.45 (157.13), May to Rs 158.20 (158.85), June to Rs 157.75 (158.54) and July to Rs 157.67 (158.50) a kg on National Multi Commodity Exchange (NMCE). The March futures for RSS 3 closed at ¥303.9 (¥303.7) (Rs 150.97), April at ¥300.5 (¥301), May at ¥298.4 (¥297.8), June at ¥295.5 (¥295.1), July at ¥291.4 (¥291.3) and August at ¥288 (¥287.8) a kg during the day session on Tokyo Commodity Exchange (TOCOM). The March futures firmed up to ¥304.5 (Rs 151.27), April to ¥302, May to ¥300.3, June to ¥298, July to ¥294.2 and August to ¥290 a kg on late trades. RSS 3 closed at Rs 151.90 (151.62) a kg at Bangkok. The grade improved to Rs 150.07 (149.51) a kg on Singapore Commodity Exchange (SICOM).

Spot prices were (Rs/kg): RSS-4: 153.50 (154); RSS-5: 152.50 (153); ungraded: 151 (152); ISNR 20: 151 (152) and latex 60 per cent: 100 (100).

Auto majors' advance tax payout soars with sales

New Delhi, March 24

The auto pack has put up a strong show on the advance tax front this fiscal, with the payouts of most auto majors registering increases between 19 and 1,524 per cent on a year-on-year basis.

The fourth instalment (March 15) payouts increased 115-576 per cent for most companies on the back of pick-up in sales in January and February this year, as customers rushed to beat an expected hike in prices soon after the Budget.

Maruti Udyog, the country's largest car manufacturer, has forked out an advance tax of Rs 1,007 crore in 2009-10, more than double the payout of Rs 401 crore in 2008-09. For the March 15 instalment this year, Maruti's advance tax payout was Rs 250 crore (Rs 36.6 crore), the latest data available with the Revenue Department showed.

Tata Motors, which did not pay any advance tax in the fourth instalment of 2008-09, has paid Rs 115 crore in the March 15 instalment this year. For financial year 2009-10, the advance tax payout of Tata Motors stood at Rs 445 crore (Rs 90 crore).

Mahindra & Mahindra's advance tax payout registered a huge jump in 2009-10 to Rs 560.5 crore (Rs 34.5 crore). For the fourth instalment, the payout was Rs 236 crore (Nil for March 15, 2009)

The strong show on the advance tax front could be a signal that these companies expect to close the current fiscal with better bottom line performance than last fiscal, when the global financial crisis had cast a shadow on their growth performance.

The auto industry recorded the highest ever sales for a month in February 2010 at 11.29 lakh units (11.14 lakh units in January 2010). The domestic passenger car segment recorded the eleventh straight month of growth in February at 1.54 lakh units (1.16 lakh units in February 2009).

Most auto majors had passed on to the customers the excise duty hike announced, as part of partial withdrawal of stimulus, in Budget 2010-11. The auto sector had been a significant beneficiary of the stimulus packages rolled out by the Government in the second half of 2008-09 in the wake of global financial meltdown.

In Budget 2010-11, the Finance Minister, Mr Pranab Mukherjee, had announced a hike in the general Cenvat rate for non-petroleum goods to 10 per cent from 8 per cent. Mr Mukherjee had also announced a hike in the ad-valorem component of excise duty on large cars, multi-utility vehicles and sports utility vehicles.

MY View

The robust growth of auto industry in INDIA and CHINA clearly signify the future demand of tyres and hence high demand of natural rubber. This demand will surely lead to more higher prices. Also climatic conditions are adverse in all the rubber producing countries due to global warming which will surely widen the gap between demand and supply of natural rubber...

Natural rubber price hike may make tyres more expensive

The recent rise in natural rubber (NR) prices has prompted the country’s leading tyre companies to re-think their price strategy. A hike in tyre prices for the second time in a year seems imminent, say analyst

In just over four weeks, the price of the benchmark grade, RSS-4, has increased 10 per cent to Rs 155 a kg.

According to sources, a price increase across categories is on the cards over the next couple of months. Tyre prices went up 2-7 per cent in January this year. Natural rubber accounts for almost 50 per cent of the total production cost of a tyre.(BS) http://www.business-standard.com/india/news/natural-rubber-price-hike-may-make-tyres-more-expensive/389652/

Rubber Gains on Speculation Economic Recovery May Boost Demand

March 24: Natural rubber advanced on speculation that a firmer economic recovery will increase demand for the commodity used in tires. Futures on the Tokyo Commodity Exchange rallied as much as 0.7 percent as the MSCI Asia Pacific Index climbed to a two- month high as signs of growing demand for commodities boosted confidence in the strength of the global economic recovery. (Business Week) http://www.businessweek.com/news/2010-03-24/rubber-advances-on-speculation-that-recovery-may-boost-demand.html

Mixed trend in spot rubber

Mixed trend in spot rubber

Kottayam, March 23

Spot rubber showed a mixed mood on Tuesday. Early declines in domestic futures kept sheet rubber under pressure and the grade weakened to Rs 154 from Rs 155 a kg failing to recover in tune with the late gains on NMCE.

The remaining grades including latex finished flat amidst scattered transactions as there was no selling pressure in the main marketing centres.

Futures improve

The April futures for RSS 4 improved to Rs 157.10 (156.39), May to Rs 158.85 (158.17), June to Rs 158.50 (158.06) and July to Rs 158.50 (158.21) a kg on National Multi Commodity Exchange (NMCE). RSS 3 weakened at its March futures to ¥303.7 (¥304.3) Yen (Rs 153.30), April to ¥301 (¥302.5), May to ¥297.8 (¥300), June to ¥295.1 (¥296.2), July to ¥291.3 (¥292) and August to ¥287.8 (¥289.1) a kg during the day session on Tokyo Commodity Exchange (TOCOM). March futures declined further to ¥300 (Rs 151.42) while the April futures improved to ¥301, May to ¥298, June to ¥295.2, and August to ¥287.9 while the July futures finished flat at ¥291.3 a kg during the night session. RSS 3 (spot) improved to Rs 151.62 (151.35) a kg at Bangkok. The grade surrendered to Rs 149.51 (150.11) a kg on Singapore Commodity Exchange (SICOM).

Spot prices were (Rs/kg): RSS-4: 154 (155); RSS-5: 153 (153); ungraded: 152 (152); ISNR 20: 152 (152) and latex 60 per cent: 100 (100).

Rubber Advances on Speculation That Recovery May Boost Demand

March 24 (Bloomberg) -- Natural rubber advanced on speculation that a firmer economic recovery will increase demand for the commodity used in tires.

Futures on the Tokyo Commodity Exchange rallied as much as 0.7 percent as the MSCI Asia Pacific Index rose to a two-month high as signs of growing demand for commodities boosted confidence in the strength of the global economic recovery.

“Rubber got a boost from rising stock markets,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “This has encouraged investment sentiment in commodities, including rubber.”

Rubber for August delivery gained as much as 2.1 yen to 289.9 yen per kilogram ($3,202 a metric ton) on the Tokyo Commodity Exchange and was at 289 yen at 12:30 p.m. local time. The most-active contract touched 290.3 yen yesterday, the highest price since March 15.

The MSCI Asia Pacific Index rose 0.5 percent to 125.12, set for the highest close since Jan. 19. The gauge has climbed 9.6 percent from a more-than-two-month low on Feb. 8 as improving U.S. jobs data, a Federal Reserve pledge to keep borrowing costs low and a Japanese bank-lending program eased concern that budget deficits in Europe may derail the recovery.

Rubber for September delivery rose as much as 0.5 percent to 23,935 yuan ($3,506) a ton on the Shanghai Futures Exchange, after dipping to 23,340 yuan. It last traded at 23,830 yuan.

Chinese imports of natural rubber surged 63 percent in the first two months of the year, the Association of Natural Rubber Producing Countries said on March 22. The natural rubber market has entered a “bullish phase” as buyers led by China boost imports, the association said in a newsletter.

In the cash market, shippers in Thailand, the world’s largest producer and exporter, offered so-called RSS-3 grade rubber for May shipment at $3.30 per kilogram today, unchanged from yesterday, according to Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo.

RSS 4 grade rubber hits Rs 155 a kg

RSS 4 grade rubber hits Rs 155 a kg

Kottayam, March 22

Spot rubber improved on Monday. The market gained further on speculative buying and short covering but lost its initial strength as domestic rubber futures shed the morning gains during late trades on NMCE. Sheet rubber finished at Rs 155 (153) a kg after hitting an intraday high of Rs 155.50 a kg on early trades. The transactions were in a low key.

Futures weak

The April futures weakened to Rs 156.50 (157.39), May to Rs 158.02 (159.33), June to Rs 157.91 (158.80) and July to Rs 158.05 (158.76) a kg for RSS 4 on National Multi Commodity Exchange (NMCE). RSS 3 firmed up to Rs 150.11 (149.51) a kg on Singapore Commodity Exchange (SICOM). The grade (spot) closed at Rs 151.35 (150.46) a kg at Bangkok. The Tokyo Commodity Exchange (TOCOM) remained closed on account of substitute holiday for Vernal Equinox Day.

Spot prices were (Rs/kg): RSS-4: 155 (153); RSS-5: 153 (152); ungraded: 152 (151); ISNR 20: 152 (151) and latex 60 per cent: 100 (100).

Natural Rubber Enters ‘Demand-Driven Bullish Phase’

March 22 (Bloomberg) -- The global natural rubber market has entered a “demand-driven bullish phase” as buyers led by China boost imports to meet rising tire demand, the Association of Natural Rubber Producing Countriessaid.

A target of 6 percent growth in world supply this year may not be met because of drought in major producing nations, the group, which represents countries accounting for 94 percent of global rubber production, said in a newsletter.

Rubber, used in tires and gloves, doubled in price last year as China overtook the U.S. as the world’s largest auto market, boosting vehicle sales by more than 40 percent. China is the world’s largest rubber consumer.

“The March scenario is very different from what was forecast earlier and there will be some negative impact on output because of the drought,” Jom Jacob, senior economist at the association, said in a phone interview from Kuala Lumpur today. “Demand is very high in major consuming nations.”

Rubber for August delivery gained as much as 1.5 percent to 289.8 yen per kilogram ($3,202 a metric ton) on the Tokyo Commodity Exchange before settling at 289.1 yen on March 19. The market is closed today for a holiday.

Expansion in output may be limited by “the severity of drought” in major producing countries, the association said. Production may gain to 9.54 million tons this year, according to a survey of member countries early this month, the association said. That compares with an International Rubber Study Group forecast last week of as much as 10.6 million tons.

‘Buoyant Demand’

“Preliminary estimates of imports and consumption in January and February for China, India and Malaysia are clear evidence of buoyant demand,” the association said. Chinese imports of natural rubber surged 63 percent in the first two months of this year, while Malaysia boosted imports by 34 percent, it said.

China’s compound rubber imports more than doubled to 127,000 tons in the first two months of this year, while natural rubber imports climbed to 267,000 tons, the association said.

“Large-scale capacity addition taking place in the Indian auto tire manufacturing industry indicates the possibility of a further acceleration in natural rubber demand in the country and more dependence on imports,” the association said.

Rising disposable incomes in the world’s second-fastest growing major economy may more than double car sales to 3 million annually by 2015, according to a 2006 forecast by the government. That has prompted Ford Motor Co., Volkswagen AG and other automakers to expand factories and introduce new vehicles in the country.

The association represents Cambodia, China, India, Indonesia, Malaysia, Papua New Guinea, Sri Lanka, Thailand and Vietnam.

Spot rubber continues to rise

Spot rubber continues to rise

Kottayam, March 20

Spot rubber prices showed a better trend on Saturday. The market continued its upward journey on covering purchases as domestic rubber futures finished firm on NMCE. Supply concerns haunted the buyers and the prices inched up though major consuming industries were not visibly active during the weekend session. Sheet rubber improved to Rs 153 from Rs 152.50 a kg amidst scattered transactions. The volumes were not impressive.

Futures gain

RSS 4 improved at its April futures to Rs 157.39 (155.94), May to Rs 159.33 (157.40), June to Rs 158.80 (158.10) and July to Rs 158.76 (157.57) a kg on National Multi Commodity Exchange (NMCE).

Spot prices were (Rs/kg): RSS-4: 153 (152.50); RSS-5: 152 (151); ungraded: 151 (150); ISNR 20: 151 (150) and latex 60 per cent: 100 (99).

Sheet rubber improves on supply concerns

Sheet rubber improves on supply concerns

Kottayam, March 19

Physical rubber prices showed a mixed mood on Friday.

According to sources the market continued to suffer from supply concerns and sheet rubber improved to Rs 152.50 from Rs 152 a kg as traders preferred to remain bullish on the grade.

Latex 60 per cent also recorded marginal gains on sustained demand while the remaining grades were flat amidst scattered transactions.

Futures firm

The April futures for RSS 4 closed firm at Rs 155.93 (154.82), May at Rs 157.64 (156.26) and June at Rs 158 (157.62) a kg while the July futures slipped to Rs 157.52 (157.66) on National Multi Commodity Exchange (NMCE).

RSS 3 improved at its March futures to ¥304.3 (¥302) (Rs 153.05), May to ¥300 (¥297.8), June to ¥296.2 (¥293), July to ¥292 (¥288.3) and August to ¥289.1 (¥285.6) a kg while the April futures slipped to ¥302.5 (¥303.1) during the day session on Tokyo Commodity Exchange (TOCOM).

The March futures firmed up further to ¥305 (Rs 153.33), June to ¥296.5, July to ¥292.4 and August at ¥289.4 a kg while April and May futures remained inactive during the night session.

RSS 3 was firm at Rs 149.51 (148.63) a kg on Singapore Commodity Exchange (SICOM).

The grade moved up to Rs 150.46 (149.95) a kg at Bangkok.

Spot prices were (Rs/kg): RSS-4: 152.50 (152); RSS-5: 151 (151); ungraded: 150 (150); ISNR 20: 150 (150) and latex 60 per cent: 99 (98).

Spot rubber improves further on short covering

Spot rubber improves further on short covering

Aravindan

Kottayam, March 18

Spot rubber made further gains on Thursday. The market opened better and improved further on fresh buying and short covering. Sheet rubber improved to Rs 152 from Rs 151 a kg though there was no fresh demand from major consuming industries. The next target of the market is reported to be Rs 160 a kg for sheet rubber and there were no sellers in the main marketing centres even at higher levels.

Futures firm

The April futures for RSS 4 closed at Rs 154.98 (154.08), May at Rs 156.35 (156.08), June at Rs 157.60 (158.10) and July at Rs 157.64(158.29) a kg on National Multi Commodity Exchange (NMCE). RSS 3 weakened at its March futures to ¥302 (¥304.5) (Rs 152.05), April to ¥303.1 (¥303.5), May to ¥297.8 (¥299), June to ¥293 (¥295.1), July to ¥288.3 (¥291.1) and August to ¥285.6 (¥288.6) a kg during the day session on Tokyo Commodity Exchange (TOCOM). The June futures improved to ¥293.8, July to ¥288.9 and August at ¥286 a kg while the March, April and May futures remained inactive during the night session. RSS 3 increased marginally to Rs 148.63 (148.20) a kg on Singapore Commodity Exchange (SICOM). The grade finished firm at Rs 149.95 (149.51) a kg at Bangkok.

Spot prices were (Rs/kg): RSS-4: 152 (150); RSS-5: 151 (149); ungraded: 150 (147.50); ISNR 20: 150 (147.50) and latex 60 per cent: 98 (98)

Next target is projected as Rs 160 a kg for sheet rubber.

Spot rubber prices improve

Kottayam, March 17

Physical rubber prices improved on Thursday. Creating yet another landmark in history, sheet rubber closed at Rs 150 (149) a kg on fresh buying and short covering.

The grade opened better and hit an intraday high of Rs 151 a kg during the morning session.

But late declines in TOCOM took the steam out the market and it lost the initial gains partially on buyer resistance.

The undercurrent was bullish and the next target is projected as Rs 160 a kg for sheet rubber.

Futures gain

The April futures for RSS 4 closed at Rs 154.15 (153.61), May at Rs 156.10 (156.29), June at Rs 158.15 (158.16) and July at Rs 158.26 (158.90) a kg on National Multi Commodity Exchange (NMCE).

The March futures for RSS 3 improved to ¥304.5 (¥301.5) (Rs 152.64), April to ¥303.5 (¥296.6), May to ¥299 (¥291), June to ¥295.1 (¥288.7), July to ¥291.1 (¥284.9) and August to ¥288.6 (¥282.8) a kg during the day session on Tokyo Commodity Exchange (TOCOM).

The grade weakened at its March futures to ¥301.9 (Rs 151.34), April to ¥301, May to ¥297.2, June to ¥293.4, July to ¥289.1 and August at ¥287.1 a kg during the night session. RSS 3 firmed up to Rs 148.20 (147.64) a kg on Singapore Commodity Exchange (SICOM).

The grade closed at Rs 149.51 (148.55) a kg at Bangkok.

Spot rates were (Rs/kg): RSS-4: 150 (149); RSS-5: 149 (147); ungraded: 147.50 (146); ISNR 20: 147.50 (146.50) and latex 60 per cent: 98 (97)

Summer showers kindle plantation sector hopes

Awaiting more:A file photo of a rubber plantation.

C.J. Punnathara

Kochi, March 17

Scattered summer showers, which lashed several parts of South-West India, have brought respite from the searing heat, and revived hopes of better harvests to the plantation sector.

“Some estates in the high ranges have received good summer showers and the temperatures have eased. However, more such showers are required to ensure bounteous new flush of leaves and a better crop in the summer months ahead,” tea planters from Munnar in Kerala said.

Tea plantations

The tea planters, who enjoyed a good crop and steady prices last year, are keeping their fingers crossed awaiting more such showers which were scattered to become increasingly widespread and recurrent over the coming days.

Rubber output

While the scanty summer showers by themselves are not expected to spurt rubber production, the onset itself can be an indicator of more rains to follow, which augurs well for the rubber industry, Mr N. Radhakrishnan, former President of the Cochin Rubber Merchants Association, said.

The scanty and scattered showers reported so far are not sufficient to increase soil humidity and enhance production. But more widespread and better showers over rubber growing belts would increase soil humidity, accelerate re-foliage of the trees which have shed their leaves during the winter season and enhance tapping in the months to come, Mr Radhakrishnan added.

Although scattered, summer showers were reported from major rubber growing areas of Kottayam, they were not reported from the neighbouring district of Idukki, which is part of the cocoa-growing belt.

Promising for cocoa

“The onset of the summer showers holds promise for the coming peak cocoa season. As the temperatures have begun to ease from last week's highs, the wilting of some of the small cocoa pods have been arrested and prospects of a good crop have begun to emerge,” Mr Venkatesh N. Hubbali, Director, Directorate of Cashew and Cocoa Development said.

Although cocoa plants flower and seed throughout the year, good summer showers are mandatory for a good crop during the peak season of May-September.

Although new acreage under cocoa coming up in Tamil Nadu and Andhra Pradesh are on irrigated lands, Mr Hubbali said that traditional areas in Kerala are in rain-fed areas and require good summer and monsoon showers for a bounteous crop.

Rain impact

Although the onset of summer showers augurs well for the cocoa crop, it is still too early to predict the impact of the crop given the scattered nature of the rains, sources in cocoa trade said. More widespread and good summer showers would result in greater flowering, seeding and better pods, auguring a good cocoa crop.

Summer showers should not just bring a respite from the heat but should enhance soil humidity, cardamom cultivators from the high ranges said.

Cardamom

Respite from intense heat and humid conditions are essential for the plants which require fair amount of shade, both of which were not available from the first round of summer showers.

More of such rains could be a promise to a better cardamom harvest this year, they added.