Spot rubber rules weak

Spot rubber rules weak

Kottayam, April 29

Spot rubber weakened further on Thursday. Heavy losses in the domestic futures dampened the market mood and most of the traders were hesitant to expand their commitments afraid of further fall in prices. Sheet rubber surrendered to Rs 167 from Rs 168 a kg on buyer resistance. The volumes were dull and the losses were limited owing to tight supplies.

Futures weak

The May futures for RSS 4 moved down to Rs 164.20 (166.30), June to Rs 166.80 (168.58), July to Rs 165 (167.22) and August to Rs 162.75 (164.26) a kg on National Multi Commodity Exchange (NMCE). RSS 3 improved marginally to Rs 175.85 (175.57) a kg on Singapore Commodity Exchange (SICOM). The grade slipped to Rs 179.20 (179.49) a kg at Bangkok.

The Tokyo Commodity Exchange (TOCOM) remained closed on account of Showa Day.

Spot rates were (Rs/kg): RSS-4: 167 (168); RSS-5: 165 (166); ungraded: 162.50 (163.50); ISNR 20: 159 (160) and latex 60 per cent: 106 (106)

Rubber market news

Tyre cos worry over rubber supplies
Posted: 28 Apr 2010 09:42 PM PDT
Thiruvananthapuram: Rising demand has put tyre makers in a precarious situation as on one hand revenues are simultaneously increasing because of increased sales, but at the same time their raw material demand has stretched the already low natural rubber supplies.

With tyre production in the first 11 months of 2009-2010 financial year rising by 17%, purchase divisions of major tyre companies are grappling to meet the fast-expanding raw material needs, especially of natural natural rubber. “Some tyre companies have already passed on impact of rising input cost to consumers in January and March and it looks that some are poised to raise prices again in May,” Vaishali Jajoo, automobile analyst at Angel Broking said, adding that a way to fight input cost pressure is debottlenecking, which most tyre firms are already doing.

Tractor tyre demand, an indicator of rising purchasing power in rural economy, is the main factor behind increasing tyre production. Production of tractor front and tractor rear tyres went up by 30% and 24% respectively, according to the latest statistics released by Automotive Tyre Manufacturers Association (ATMA).

Tyre production touched 87.8 million units in the first 11 months of last financial year, a growth of 17% over 74.7 million units produced during the same period of previous financial year. Good monsoon this year could translate into better tractor tyre sales making tyre companies worry as to whether they will be able to procure adequate quantities of raw material.

“Rubber unavailability is likely to be a big roadblock to the growth momentum of tyre industry,” Neeraj Kanwar, Chairman ATMA said.

Tyre companies said that its not just the historic high price of Rs 170 per kg (more than 80% the average price of Rs 95 a Kg in April 2009) that’s worrying them, but sheer unavailability of natural rubber that is more critical.

Kanwar said, “growers are hoarding rubber and not selling as spot market prices are rising almost daily by Rs 2-3 per kg.” Tyre companies have also questioned the natural rubber production data compiled by state-run Rubber Board. “Its a mystery why the Board makes supply projections too pink to be true,” says Rajiv Budhraja, Director General, ATMA.

ATMA is gearing up to raise the issue of over-optimistic rubber production data at the board of directors meeting on May 12.

(financialexpress.com)

World rubber output to grow 6.2% in ’10
Posted: 28 Apr 2010 09:34 PM PDT
Thiruvananthapuram: Global rubber supply is likely to grow by 6.2% in 2010, according to the crop outlook report by Malaysia-based Association of Natural Rubber Producing Countries (ANRPC).

“From 8,821 million tonne in 2009, supply of natural rubber in ANRPC member countries is now anticipated to grow at a rate of 6.2% in 2010, touching 9,367 million tonne,” Djoko Said Damardjati, secretary-general, ANRPC said. ANRPC accounts for about 94% of the global supply of natural rubber.

Last year, world rubber supply had shrunk 3.6% to 8.821 million tonne, mainly due to Indonesia ‘s downward revision of stocks. “A faster-than-expected global economic recovery” and “resultant acceleration in natural rubber demand” are major drivers of rubber market in short and medium term, Djoko Said Damardjati said, in ANRPC’s April Bulletin.

Besides the rising consumption in China, India and Malaysia, a section of the tyre manufacturing industry, which have been shying from coming into the market in March and April, are expected to make a comeback from next week.

“They had postponed their purchases in expectation of comfortable availability after the wintering season,” the ANRPC Bulletin, that studies the trends in first quarter of 2010, to project the outlook for the whole year, showed.


Analysts indicate three key reasons, why the supply may not feed natural rubber demand is that age of existing yielding trees in major producing countries is likely to exert a downward pressure on average yield.

Secondly, higher number of small holdings in rubber limits flexibility to enhance yield by short-term measures and finally, rubber production already suffers from labour shortage.

As global economy gets back on its leg, creation of more opportunities in industrial and tertiary sectors is likely to aggravate the shortage of workers in rubber estates.

However, most analysts believe that in the long-term, there is no cause for pessimism. The net effect of two opposite processes would decide the supply from 2012 onwards.

(financialexpress.com)