Spot rubber retreats on global cues

Spot rubber retreats on global cues

Kottayam, May 6

Spot rubber made yet another sharp retreat on Thursday. The market fell steeply lacking positive reports from global markets though there was only nominal selling from dealers. Sheet rubber declined to Rs 153 from Rs 156 a kg and there were no genuine buyers on the grade even at lower levels. It is even said that the bull phase is over and the market is showing signs of bearishness which might continue in the days ahead.

Futures improve

The May futures for RSS 4 improved to Rs 151.50 (151.47), June to Rs 154.60 (153.84), July to Rs 153.50 (152.44) and August to Rs 151.01 (150.02) a kg on National Multi Commodity Exchange. RSS 3 nosedived with the May futures dropping to ¥356/Rs 171.93 (¥395), June to ¥305.4 (¥350.2), July to ¥289.8 (¥320.5), August to ¥282 (¥302.3), September to ¥279.5 (¥294.5) and October to ¥279.6 (¥293) a kg during the day session on Tokyo Commodity Exchange. RSS 3 (spot) was quoted at Rs 161.18 a kg at Bangkok.

Spot rates were (Rs/kg): RSS-4: 153 (156); RSS-5: 149 (153); ungraded: 148 (151); ISNR 20: 145 (148) and latex 60 per cent: 100 (102).



Scrap import duty on natural rubber; tyre makers
Posted: 05 May 2010 04:07 PM PDT
Industries mainly consisting of type makers along with small enterprises making products like shoes and household items have urged the government to allow the duty-free import of two lakh tonnes of rubber via a government agency and also put a ban on its exports.

The end user industry resorted to the step as they come under pressure fro increasing rubber prices and they believe that more supply of natural rubber for domestic use will bring down the prices in the country.

The user industries are also asking for a ban on futures trading in rubber and bringing down the import duty to 10 per cent from 20 per cent along with an increase in export duty of finished goods.

The Automotive Tyre Manufacturers' Association (ATMA), All India Rubber Industries Association (AIRIA) and Indian Cycle and Rickshaw Tyres Manufacturing Association have joined together and send requests to the commerce and finance ministries.

The representatives met the Prime Minister this February and later also discussed the matters with the Planning Commission.

President of ATMA, Mr Neeraj Kanwar said, "In the last year, when rubber prices were at Rs 80-90 a kg, our margins stood at 11-12 per cent. This year, because of the high prices the EBITDA has come down drastically. To circumvent a price of Rs 170 a kg, the tyre industry would need to raise prices 20-25 per cent."

He further said that the Rs 19,000-crore investments of the tyre industry may get delayed if high prices continue to put pressure on its margin. According to Rubber Board data natural rubber prices have risen Rs 149.48 a kg in March, from Rs
137.72 a kg in January.

The consumption in 2010-11 is expected to go up 20 per cent while the production will rise only between 5-6 per cent. India was the fourth largest global producer of natural rubber at 820,000 million tones in 2009 behind Thailand, Indonesia and Malaysia according to AIRIA data.

The overall rubber industry has a total turnover of Rs 45,000 crore and employs more than five million people in the country. The prices of rubber have risen mainly due to the high demand form the automotive industry.

(stockwatch.in)





World Demand for Industrial Rubber Products to Reach $97.8 Billion in 2013
Posted: 05 May 2010 03:59 PM PDT
Global demand for industrial rubber products is forecast to climb 4.3 percent annually through 2013 to $97.8 billion. Market advances in developing areas will be fueled by healthy economic growth, ongoing industrialization efforts and rising personal income levels, bolstering manufacturing output and fixed investment expenditures. The industrial equipment market, which includes industrial machinery and equipment as well as off-road vehicles, will continue to comprise the largest share of aggregate demand in 2013. These and other trends, including market share and product segmentation, are presented in World Industrial Rubber Products, a new study from The Freedonia Group, Inc., a Cleveland-based industry research firm.

China, which will surpass the US to become the largest national market for industrial rubber products, will account for over one-third of all additional demand generated through 2013. India will also record strong gains, and sales growth is expected to be healthy as well in a number of lower-volume markets, including Thailand, Indonesia and Malaysia. Advances will continue to be solid in Eastern Europe, reflecting the ongoing shift of durable goods manufacturing to that region, primarily from Western Europe.

Although slumping in the shorter term, industrial rubber product demand in the US is expected to recover by 2013. Advances will benefit from a turnaround in motor vehicle production, as well as by recovery in the manufacturing sector. Western Europe and Japan will experience sluggish gains, reflective of the maturity of these markets. However, these areas -- along with Australia and Canada -- will remain the most intensive users of industrial rubber products because of the advanced industrial and technological nature of their economies.

Mechanical rubber goods comprised the largest product segment in 2008. Suppliers of mechanical rubber products will benefit from continued gains in global motor vehicle production through 2013, as these products are highly represented in this market. Advances will be stronger in the hose and belt segments, reflecting their wide diversity of applications and stronger price outlook compared to mechanical goods.

The Freedonia Group is a leading international business research company, founded in 1985, that publishes more than 100 industry research studies annually. This industry analysis provides an unbiased outlook and a reliable assessment of an industry and includes product segmentation and demand forecasts, industry trends, demand history, threats and opportunities, competitive strategies, market share determinations and company profiles.

(transworldnews.com)





Stock Analyst Notes Cooper Tires Reports Strong 1Q
Posted: 05 May 2010 03:49 PM PDT
Cooper Tires CTB reported strong first-quarter results, buoyed by resurgent demand for replacement tires in both its U.S. and international markets. We had expected Cooper to experience a spike in tire sales in 2010 as pent-up replacement tire demand is released. As such, we are maintaining our fair value estimate.


Cooper benefitted from strong replacement tire volumes during the quarter, with tire shipments increasing 19% year over year in the U.S. market, and 77% in its international segment. Stronger volumes helped boost the firm's profitability by increasing plant utilization (which approached 100% during the quarter) and spreading fixed costs over a greater number of tire units. We think that the firm will continue to run at almost full capacity during the remainder of 2010 due to rebounding tire demand and drastic reductions in manufacturing capacity across the tire industry.

While the uptick in tire volumes provided a noticeable tailwind for Cooper, we are concerned about the steady rise in raw material costs, which show no sign of abating. With rubber prices at an all-time high given the confluence of surging Asian demand and supply-side disruptions, Cooper experienced an 18% year-over-year increase in raw material costs, which it failed to fully offset with price increases. Management expects sequential increases in raw material costs for the second quarter of 2010 to exceed 10%. In response, Cooper announced a 7.5% price hike for its U.S. tires, to be enacted in June. While we believe these price increases will be successful in the near-term given the current tight supply-demand dynamics in the U.S. tire industry, continued appreciation of raw material costs may prove more difficult for Cooper to pass through to its customers.
(quicktake.morningstar.com)