Rubber seen easing on global cues, weak demand

Rubber seen easing on global cues, weak demand
Posted: 19 Apr 2010 03:49 PM PDT
MUMBAI: Indian rubber prices, which hit record highs last week, are likely to correct this week tracking weakness in global markets and as reluctant buyers wait for a sharp fall before purchasing, analysts said.

"Buyers are postponing purchase. Prices in international market are falling and tyre-makers are waiting for a fall in domestic prices," said Shiji Abraham, analyst with JRG Wealth Management.

Tokyo rubber futures tumbled to a near-three-week low on Monday, falling sharply from last week's 21-month high as the Goldman Sachs fraud probe unnerved financial markets and lower oil prices added to the pressure on rubber, dealers said.

The benchmark May contract on the National Multi-Commodity Exchange(NMCE) provisionally closed 1.4 per cent down at Rs 16,629 per 100 kg, after hitting a record high of Rs 17,189 last week.

Spot price of the most traded RSS-4 rubber (ribbed smoked sheet) fell by Rs 250 to Rs 16,700 in Kottayam, Kerala, on Monday, Rubber Board data showed.

The price had hit a record high of Rs 16,950 on Saturday.

Production worries in key producing countries like Thailand and Malaysia will limit the fall in prices, Shiji said.

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

India's natural rubber production dropped 3.8 per cent in 2009/10 due to adverse climatic conditions, but a rise in consumption during the period lifted the country's imports, the Rubber Board said.



(economictimes.indiatimes.com)





Rubber Board output estimate dubbed ‘over-optimistic'
Posted: 19 Apr 2010 03:47 PM PDT
Kochi, April 19
Projections made by the Rubber Board on the country's rubber production for the year 2010-11 are grossly over-estimated, the Indian tyre industry has said.
The Automotive Tyre Manufacturers Association (ATMA) has termed the Rubber Board's projection of 70,280 tonnes of additional production this year over-optimistic. This is far in excess of the average annual increase of 21,000 tonnes recorded by Indian rubber producers over the last 10 years, ATMA pointed out.
“We see no basis for the over-optimistic growth projections made by the Rubber Board. The over-estimated projection will only send a wrong signal to the Government about natural rubber availability while the gulf between production and consumption of rubber is widening in India and production has not been able to keep pace with rising consumption.
The production deficit of rubber in India increased to 99,165 tonnes in 2010-11 as against 7,220 tonnes in 2008-09. To meet the deficit, the rubber industry had to import 1,70,000 tonnes of rubber in 2009-10 as against 81,500 tonnes in 2008-09,” Mr Neeraj Kanwar, Chairman of ATMA, said.
Rubber board's view
ATMA also pointed out that an earlier study conducted by the Association of Natural Rubber Producing Countries had projected production of rubber in India in 2010 at 8,53,000 tonnes, the same production as in 2006.
However the Rubber Board has defended its projections stating that it is just three per cent more than the production of 2008-09. It pointed out that last year was an exceptional year of low global production and growth projections should not be based on such exceptional years.
Its projections were based on the fact that more than 6,000 hectares of additional area would come under tapping as young trees planted seven years ago mature and become ready for tapping. The prognosis were also based on the fact that new and high yielding planting materials were used in the new plantations as also the surmise that the high prices would induce the farmer to intensify his tapping operations.
Consumption issue
ATMA has also expressed its surprise on the growth in consumption as projected by the Rubber Board. The Board has lowered the incremental growth in natural rubber consumption to 56,395 tonnes as against a growth of 59,280 tonnes in 2009-10.
In order to meet the rising demand from vehicle makers in the country, new capacities being put up tyre manufacturers and rubber consumption is poised to grow spirally. The decrease in incremental consumption as estimated by the Rubber Board is most unfortunate and belie the growing requirements from consuming interests, Mr Kanwar added.
In a recent communication to the Prime Minister, Mr Kanwar has asked for permission for duty-free import of at least 2,00,000 tonnes of natural rubber as rubber availability has become a matter of serious concern even when the prices have touched a historic high.
Currently rubber prices are ruling at Rs 172 a kg, almost 80 per cent more than the average price of Rs 95 per kg in 2009. Tyre companies are not in a position to import rubber since they have to pay a 20 per cent customs duty on such imports.
(thehindubusinessline.com)