Rubber Drops to 3-Week Low as Exchange Checks for Manipulation

Rubber Drops to 3-Week Low as Exchange Checks for Manipulation

April 22 (Bloomberg) -- Rubber dropped to a three-week low as the Tokyo Commodity Exchange, which provides the benchmark price for the commodity, checked futures positions held by its members for possible price manipulation.

September-delivery rubber, the most-active contract, fell as much as 4.3 percent to 311.4 yen per kilogram ($3,354 a metric ton), the lowest level since April 1. The price surged by 4 percent in the previous two days and reached a 21-month high of 338.5 yen on April 16. The April-delivery contract gained 0.8 percent to 445 yen, after jumping as much as 2.3 percent to a record 450 yen yesterday.

The exchange is asking commodity brokerage companies how many long positions they hold in contracts for delivery in April, May and June, Kazunari Hayakawa, executive managing officer for the exchange, said today in an interview. “We need to check whether any price manipulation is occurring,” he said by phone. Long positions are bets that prices will rise.

The September-delivery contract, the most active by volume and open interest, lost 2.4 percent to 317.6 yen per kilogram at 1:31 p.m. local time.

The April-delivery contract surged 35 percent this month. Speculators with short positions in April futures must buy back the contract by tomorrow, its expiry date, otherwise the raw material will be delivered. Short positions are bets that prices will decline.

Thai Supply

Supply from Thailand, the world’s largest producer and exporter, decreased seasonally as the nation is in a low- production period from February to April, diminishing supplies and driving cash prices to a record. The nation is in the wintering season, when rubber trees shed their leaves and latex output slows.

The price excluding freight and insurance of May-delivery Thai RSS-3 grade rubber climbed to a record 128.05 baht ($3.98) per kilogram yesterday, according to the Rubber Institute of Thailand.

Prices in Indonesia, the second-largest producer, jumped to the highest since 2008 this year, Rubber Association of Indonesia Chairman Asril Sutan Amir said April 16.

September-delivery rubber on the Shanghai Futures Exchange lost 1.2 percent to 24,300 yuan ($3,560) a ton at the 11:30 a.m. local time break.

Spot rubber prices decline

Kottayam, April 22

Spot rubber declined on Thursday. Selling from certain dealers kept the market under pressure at higher levels, while another sharp fall in domestic futures dampened the sentiments further. Sheet rubber surrendered to Rs 167 from Rs 169 a kg as there were no fresh enquiries from any major consuming industries. “We expect the market to bounce back and break the 170-mark once the correction is over,'' an observer said.

Futures weak

The May futures declined to Rs 165.50 (167.30), June to Rs 168.70 (170.57), July to Rs 168.05 (170.21) and August to Rs 165.50 (166.99) a kg for RSS 4 on National Multi Commodity Exchange. The April futures improved to ¥450 (¥441.5) (Rs 215.72) and May to ¥392 (¥386.8) while the June futures for RSS 3 weakened to ¥355.9 (¥363.5), July to ¥337.9 (¥344.1), August to ¥325.7 (¥332.3) and September to ¥318.3 (¥325.5) a kg during the day session on Tokyo Commodity Exchange. RSS 3 moved down to Rs 181.04 (182.53) a kg on Singapore Commodity Exchange (SICOM). It slipped to Rs 177.43 (177.63) a kg at Bangkok.

Spot prices were (Rs/kg): RSS-4: 167 (169); RSS-5: 165 (167); ungraded: 163 (164); ISNR 20: 161 (162) and latex 60 per cent: 106 (106).


Natural rubber output likely to rise 8.45%
Posted: 21 Apr 2010 08:46 PM PDT
The Rubber Board has projected an increase of 8.45 per cent in the country’s natural rubber (NR) output for the current financial year. According to board’s projection, the total production this year would be 901,680 tonnes compared with 831,400 tonnes last year.

This will be the first time that the natural rubber production will cross the 900,000-tonne mark.

The incremental increase for FY11 will be 70,280 tonnes as against a fall of 33,100 tonnes in 2009-10. The board estimates a marginally lower growth in the case of consumption, as it estimates total consumption of 986,980 tonnes for the current financial year.
The consumption is projected to grow by 56,395 tonnes in the current year. In 2009-10, consumption increased 6.8 per cent at 930,585 tonnes as against 871,720 tonnes in 2008-09.

Meanwhile, Automotive Tyre Manufacturers Association (Atma) has questioned the rationale behind projections.

An analysis of Rubber Board Data shows an average incremental growth in production of only 21,000 tonnes a year over the last 10 years (FY01 to FY10).

A study of the Association of Natural Rubber Producing Countries (ANRPC) put the projected production of NR in India in the year 2010 at 853,000 tonnes, the same as production in the year 2006.

“With new capacities being put up by tyre manufacturers in the country to meet the rising demand from vehicle makers, the NR consumption will grow spirally. The decrease in incremental consumption as estimated by the board is most unfortunate and belie the growing requirements from consuming interests”, said Neeraj Kanwar, chairman, Atma.


India's 2010/11 rubber output seen up 7.5 pct
Posted: 21 Apr 2010 08:40 PM PDT
By Rajendra Jadhav

MUMBAI, April 21 (Reuters) - India's rubber production is likely to rise by 7.5 percent to 893,000 tonnes in 2010/11 helping reduce costlier imports, a senior Rubber Board official said on Wednesday.

"Last year production was down due to bad weather. Now conditions are better. We are estimating higher production," the official, who declined to be named, told Reuters.

The Rubber Board is a statutory body constituted by federal government, under the Rubber Act 1947, for the overall development of the rubber industry in the country.

In 2009/10, the country had produced 831,000 tonnes of rubber, down from 864,500 tonnes a year ago, he said.

But analysts and Kerala-based spot traders were sceptical about the projected jump in production in 2010/11.

"Yes, production will rise this year. But I am not expecting it to rise by 62,000 tonnes. Around 20-25,000 tonnes rise is possible," said Shiji Abraham, analyst with JRG Wealth Management.

Lower domestic supplies and robust demand from tyre makers had forced India to more than double rubber imports last year and pushed up prices to a record.

But improvement in production may cut 2010/11 rubber imports to 70,000 tonnes from 171,000 tonnes a year ago, the board official said.

Market participants said rubber prices, which hit record highs on Wednesday, are unlikely to fall drastically as consumption is also rising in the world's fourth biggest rubber producer.

The consumption for 2010/11 is pegged at 978,000 tonnes, up 5 percent compared to 931,000 tonnes a year ago.

The benchmark June contract NMRUM0 on the National Multi-Commodity Exchange (NMCE) hit a record peak of 17,600 on Wednesday, the highest level for second month contract since futures trade was introduced in 2003.

Spot price of the most traded RSS-4 rubber (ribbed smoked sheet) hit a record high of 16,950 rupees in Kottayam, Kerala, on Wednesday, as per data compiled by the Rubber Board.

In India, sales of vehicles -- including cars, utility vehicles, trucks, buses, motorcycles and scooters -- jumped an annual 26.4 percent in 2009/10 to 12.3 million units, data from Society of Indian Automobile Manufacturers (SIAM) showed.

The South Asian country's rubber exports in the current year are likely to double to 50,000 tonnes, the official said.