Rubber industry urges Govt to regulate prices

Rubber industry urges Govt to regulate prices
Many units on the verge of closure, says AIRIA.


Kochi May 28

The rubber industry has sought Government intervention to keep natural rubber prices in check.

It has pointed out that natural rubber prices had moved steadily from Rs 151 a kg on May 11 to Rs 170/kg on May 25, a 13 per cent increase in a fortnight.

A joint communication in this regard has been sent by the All India Rubber Industries Association (AIRIA), the Automotive Tyre Manufacturers Association (ATMA) and the Indian Cycle and Rickshaw Tyre Manufacturers, which together account for the entire rubber consumption in the country, comprising both tyre and non-tyre units.

Closure feared

“While the Government is safeguarding the interests of the rubber growers, the future of five million people employed around 5,000 rubber units across the country has been grossly overlooked. Many such units, especially those in the MSME sector are on the verge of closing down as rubber prices continue to rise at an unprecedented pace. And even at such prices adequate rubber stocks are not available,” Mr T.K. Mukherjee, President, AIRIA, said.

Supply-Demand deficit

While the production of natural rubber in the country lagged behind consumption by 1,00,000 tonnes last year, the associations warned that the production-consumption deficit is likely to increase to 1,75,000 tonnes in 2010-11.

The industry association pointed out that the option of rubber import is not feasible as the Government charges 20 per cent duty on import of rubber while finished goods can be imported at less than 10 per cent duty.

Govt intervention sought

The communication to the Government follows a recent order by the Delhi High Court on a petition filed by the three associations, a press release said.

In the petition the three associations urged the Delhi High Court to impress upon the Government to regulate prices through removal of inverted duty structure in natural rubber by fixing a minimum and maximum price and curbing speculative interest by banning futures trading in rubber.

Disposing of the three petitions filed by the rubber consuming industry, the High Court has directed either the Ministry of Commerce or the Rubber Board to consider carefully the representations made by the petitioners regarding natural rubber pricing, the release said.


IMD sees monsoon onset ‘around Monday'
India Meteorological Department (IMD) has said that the onset of southwest monsoon over Kerala would occur ‘around May 31'.

The IMD had, on May 14, issued the forecast for onset of monsoon over Kerala on May 30 with a model error of 4 days.

It based its latest outlook on interpretation of latest meteorological conditions and also guidance of numerical weather models.


Physical rubber rules firm

Kottayam, May 28

Physical rubber prices were firm on Friday.

The market opened better with sheet rubber quoting at Rs 172 a kg but it lost the gains partially on late trades lacking follow-up buying at higher levels.

Mixed trend

Sheet rubber finished unchanged at Rs 171 a kg while the remaining grades except latex settled on the positive side. The trend continued to be mixed.

RSS 4 improved at the June futures to Rs 170.80 (168.67), July to Rs 170 (167.84), August to Rs 163.50 (160.24) and September to Rs 157.95 (155.10) a kg for on National Multi Commodity Exchange.

Futures up

The June futures for RSS 3 increased to ¥376 (¥369.5), July to ¥354 (¥349.7), August to ¥324.5 (¥318.7), September to ¥298.2 (¥294.1), October to ¥286.4 (¥283.8) and November to ¥284.8 (¥281.3) a kg during the day session on Tokyo Commodity Exchange.

The August futures firmed up marginally to ¥326.2, September to ¥300, October to ¥286.8 and November to ¥285.2 a kg while the June and July futures remained inactive during the night session.

Spot rates Rs/kg were: RSS-4: 171 (171); RSS-5: 169 (168); Ungraded: 167.50 (166); ISNR 20: 152 (151) and Latex 60 per cent: 110 (110).



User industries ask PMO to intervene on rubber prices
Posted: 28 May 2010 06:35 AM PDT
In a sequel to the High Court of Delhi telling the Union government to consider rubber user industries’ plea for price controls on the crucial product, the rubber user industries have asked the Prime Minister’s Office to move swiftly on the matter.

Natural rubber prices continue to rise, by Rs 2-3 a kg every second day, goes the plea from the same three parties who’d petitioned the HC — the All India Rubber Industries Association (AIRIA), the Automotive Tyre Manufacturers Association and the Indian Cycle and Rickshaw Tyre Manufacturers Association.

Since May 10, when the benchmark grade RSS-4 variety ruled at Rs 151 a kg, the price had moved up to Rs 170 a kg on May 25, according to Rubber Board data.

“While the government is safeguarding the interests of rubber growers, the future of five million people employed in around 5,000 rubber units across the country has been grossly overlooked. Many such units, particularly those in the small and medium enterprises sector, are on the verge of closing down, as rubber prices continue to rise at an unprecedented pace, and even at such prices, adequate rubber is not available,” said T K Mukherjee, president of the AIRIA.

The petitioners complain the option of import of rubber is not feasible, as the government continues to charge a 20 per cent tariff on this, although finished rubber goods can be imported at less than 10 per cent duty.

According to the communication, the production of natural rubber in the country lagged consumption by 1,00,000 tonnes in 2009-10. In 2010-11, NR production is likely to lag consumption by 1,75,000 tonnes, it contends.

AIRIA has urged import of 2,00,000 tonnes of duty-free rubber to survive the shortage and to cool the rising prices.

The three associations had petitioned the HC in Delhi to order th government to regulate NR prices and also ban futures trading in it, beside some related measures. The HC order, given earlier this week, asked the government to consider the matter carefully and give detailed reasons for whatever action it chose to do or not do. Only after that, it said, would there be a case for asking the courts to intervene.

(business-standard.com)


Rubber Futures in Tokyo Climb as Much as 2.1% to 287.2 Yen/Kg
Posted: 28 May 2010 06:41 AM PDT

By Aya Takada
May 28 (Bloomberg) -- Rubber futures in Tokyo advanced as much as 2.1 percent to 287.2 yen a kilogram. The November- delivery contract reached the highest level in three weeks.
(bloomberg.com)





Rubber May Jump 25% to 30-Year High on China, Japan Broker Says
Posted: 28 May 2010 06:39 AM PDT
By Aya Takada and Yasumasa Song

May 28 (Bloomberg) -- Rubber may climb at least 25 percent to the highest level in three decades as demand increases in China, the largest consumer, outweighing concern European use will slow, said an executive manager at broker Yutaka Shoji Co.

Futures may surpass the 2008 peak of 356.9 yen per kilogram ($3,922 a metric ton) on the Tokyo Commodity Exchange this year to reach the highest level since March 1980, said Kazuya Tetsu, who traded the commodity for more than 30 years at Marubeni Corp. before joining Yutaka Shoji last month.

Prices gained 3.6 percent this year after doubling in 2009 as the rally slowed on concern the sovereign debt crisis in Europe will stall the economic recovery, hurting demand for commodities. Car ownership in China, the world’s largest auto market, will expand, boosting consumption of the raw material used in tires, Tetsu said in an interview in Tokyo.

“China’s influence on the market and global economies is getting stronger,” Tetsu said yesterday. Demand from the country “is setting the market’s direction,” he said.

Rubber for November-delivery, the most-active contract in Tokyo, gained 1.8 percent to 286.20 yen at 2:17 p.m. local time today. The price reached a five-month low of 250.9 yen on May 17, down from a peak of 338.5 yen about a month earlier.

A price jump will benefit producers in Thailand, Indonesia and Malaysia, the biggest suppliers, and potentially boost costs for tire makers such as Bridgestone Corp. Marubeni is the country’s biggest trader of the commodity and Yutaka is one of the top five raw-materials brokerages.

Inflation Hedge

The European debt turmoil may force governments to keep interest rates low and delay implementation of their “exit policy”, leading to renewed investor interest in commodities as an inflation hedge, Tetsu said. Europe represented 15 percent of global consumption estimated at 10.2 million tons in 2008, according to International Rubber Study Group.

Sales of cars, sport-utility vehicles and multipurpose vehicles in China jumped 33 percent from a year earlier to 1.11 million units in April, according to the China Association of Automobile Manufacturers. In the first quarter sales jumped 76 percent to 3.52 million units.

Consumption of natural rubber in China may grow 10 percent this year to 3.35 million tons from 2009, the Association of Natural Rubber Producing Countries said in its May report.

Supplies of natural rubber may increase seasonally, helping curb prices on the cash market, Kazunori Kokubo, general manager at the international business section of Yutaka Shoji, said in the same interview.

Narrow Gap

“Tightness in supply will probably be alleviated in July as the influence from wintering will diminish,” he said. Trees shed their leaves during wintering, or the low-production period that runs from February to April, leading to lower latex output.

The increase in production may narrow the price gap between the nearby month on the Tokyo exchange and the most active contract, Kokubo said. June-delivery rubber added 1 percent to 373 yen at 2:06 p.m. local time.

Total production of natural rubber will grow 6.2 percent to 9.37 million tons this year, according to the ANRPC report. The association represents Cambodia, China, India, Malaysia, Indonesia, Papua New Guinea, Philippines, Singapore, Sri Lanka, Thailand and Vietnam.

Cash prices in Thailand, the largest producer and exporter, increased as rains in southern provinces disrupted tapping, according to the Rubber Research Institute of Thailand. Thai RSS-3 grade rubber for June delivery rose 1.6 percent to 125.40 baht ($3.85) a kilogram, the institute said on its website yesterday. The price climbed to a record 130.55 baht April 27.

(bloomberg.com)





Rubber Has Best Weekly Gain Since December as Demand Recovers
Posted: 28 May 2010 06:38 AM PDT
By Aya Takada

May 28 (Bloomberg) -- Rubber climbed for a third day and booked the largest weekly gain since December as a rally in oil raised the appeal of the commodity and an advance in equities boosted investor interest in risk assets.

Futures in Tokyo advanced as much as 2.6 percent to the highest level since May 6. The price has climbed 6.8 percent this week, the best performance since the week ended Dec. 18.

Oil was poised for its first weekly gain in four weeks after China affirmed its commitment to investing in Europe and U.S. reports signaled that energy demand may recover with an economic rebound. Asian stocks climbed for a third day, after China said a report that it was reviewing foreign-exchange holdings of euro assets was “groundless.”

“Sales spurred by Europe’s debt concern have subsided after the report from China,” Hisaaki Tasaka, an analyst at Tokyo-based commodity broker ACE Koeki Co., said today by phone. “Rubber tracked a recovery in oil and stocks.”

Rubber for November delivery, the most-active contract, gained as much as 7.3 yen to 288.6 yen per kilogram before settling at 284.8 yen on the Tokyo Commodity Exchange.

The price may surpass the 2008 peak of 356.9 yen per kilogram this year to reach the highest level since March 1980, Kazuya Tetsu, executive manager at Tokyo-based broker Yutaka Shoji Co., said in an interview yesterday.

Market Direction

“China’s influence on the market and global economies is getting stronger,” Tetsu said. Demand from the country “is setting the market’s direction,” he said.

The European debt turmoil, which triggered a selloff of the raw material this month, may force governments to keep interest rates low and delay implementation of their “exit policy,” leading to renewed investor interest in commodities as an inflation hedge, he said.

Crude rose 4.3 percent yesterday to settle at $74.55 and was little changed today. The MSCI Asia Pacific Index gained 1.5 percent to 113.36, extending a global rally.

“Investors’ concerns are mitigated by China’s intention to invest in Europe,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc.

Futures also increased after cash rubber prices in Thailand, the largest producer and exporter, increased. Thai prices extended gains as rain in some southern provinces disrupted tapping, lowering supply, the Rubber Research Institute of Thailand said on its website.

Thai RSS-3 grade rubber for June delivery rose 1.6 percent to 125.40 baht ($3.85) a kilogram yesterday, according to the institute. Thailand’s market is closed today for a public holiday.

September-delivery rubber on the Shanghai Futures Exchange added 1.4 percent to settle at 22,905 yuan ($3,353) a ton.

(bloomberg.com)