Rubber Has Second Weekly Gain on Supply Concern, Tire Sales

Rubber Has Second Weekly Gain on Supply Concern, Tire Sales
Posted: 25 Jun 2010 01:05 AM PDT
By Aya Takada

June 25 (Bloomberg) -- Rubber climbed for a third day on speculation that rainfall will disrupt output in Thailand, the world’s largest producer, making it difficult for suppliers to meet growing demand from tire makers.

Futures in Tokyo gained as much as 1.5 percent, nearing a one-week high reached yesterday. The price climbed 3.8 percent this week, booking the second weekly increase.

Bridgestone Corp., the largest tiremaker, raised its first- half net income forecast by 37 percent yesterday, citing higher sales and overseas prices. The monsoon covering the Andaman Sea and the Gulf of Thailand is causing heavy rains in many parts of the country, according to the Thai Meteorological Department.

“Futures were supported by a strong cash price amid speculation rain may keep disrupting tapping in Thailand,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “A bullish earnings outlook by Bridgestone was also positive to the market.”

November-delivery rubber gained as much as 4.3 yen to 285.2 yen per kilogram ($3,184 a metric ton) before settling at 284.7 yen on the Tokyo Commodity Exchange. The December-delivery contract, which was listed on the bourse today, settled at 278.6 yen after opening at 279 yen.

Bridgestone said yesterday net income in the six months ending June may be 37 billion yen ($413 million), compared with a previous projection of 27 billion yen. The company attributed the revision to increased tire sales and improvement in product prices in overseas markets.

Strong Demand

“Given the outlook, tire demand may remain strong for the rest of this year,” Saito said.

China, the world’s largest auto market, is the biggest user of natural rubber. The nation may increase gross imports of the raw material to 1.68 million tons this year, from 1.59 million in 2009, according to a May report from the Association of Natural Rubber Producing Countries.

Rubber prices may climb 26 percent next year as supplies lag behind demand, according to Royal Bank of Scotland Asia Securities (Singapore) Pte.

Natural rubber may average $4,500 a ton next year, up from $3,580 a ton year-to-date, as “heavy rainfall in southern Thailand has disrupted supply” and “inventory levels in China are worse than we expected,” Nirgunan Tiruchelvam, a commodities analyst at the bank, said in an e-mailed report.

The benchmark price in Thailand advanced 0.8 percent to 118.85 baht ($3.67) a kilogram, supported by limited supply and growing auto demand in many countries, the Rubber Institute of Thailand said on its website today.

November-delivery rubber on the Shanghai Futures Exchange added 0.4 percent to 21,890 yuan ($3,222) a ton at 3:00 p.m. local time.

(bloomberg.com)





Rubber, tea estates set to gain from rain, sunshine
Posted: 25 Jun 2010 01:04 AM PDT
C.J. Punnathara

Kochi, June 24

The intermittent rain and sunshine last week augurs a better crop for the rubber and tea plantations of South India, but is likely to dampen the cardamom production. Bouts of rains and sunshine is the ideal weather for rubber plantations since it augments better production as well as enable tapping operations, Mr N Radhakrishnan, former President of the Cochin Rubber Merchants Association, said.

The farmers were already enthused by the high reigning prices and these ideal weather conditions would have provided the final catalyst, Mr Radhakrishnan added. Also, almost 70-75 per cent of the plantations are reported to have undertaken rain-guarding of their trees to ensure that tapping continues unhindered even in the rains. However, arrivals to the markets have thinned out.

Renewed buying

And this had nothing to do with tapping or production but has more to do with speculation and holding back of stocks, sources in the trade said. The thinning arrivals were mainly due to the high prevalent prices which have prompted the farmer to hold back his stocks in anticipation that the price rise might be sustained into the coming days, the sources added. Reports of renewed buying by China from global rubber markets have also propped up the Indian rubber prices.

While international rubber sheet prices had often overtaken Indian prices in the recent past, sources pointed out that Standard Malaysian Rubber (SMR) prices were often reigning lower than the Indian prices. The corresponding domestic grade would be the Indian Standard Natural Rubber (ISNR) which is most often of a lower quality. While SMR is made from pure latex, ISNR is made from crump rubber, which is the residue from the hardened latex.

While the superior SMR prices are quoting in the Malaysian markets at Rs 135 a kg, the inferior ISNR prices are quoting over Rs 150, Mr Radhakrishnan said. This is mainly because of the weak demand for SBR from the developed markets of the West which were its traditional big importers. Most of the Asian markets trade in rubber sheets. Trade sources said that it would be feasible for India to import SMR at the current prices to stem the Indian price rise. However, they conceded that any news of imminent imports into India was likely to trigger price spiral in SMR.

Crop arrivals

Reports indicate that intermittent rains coupled with sunshine have resulted in a flush of new leaves in South Indian tea plantations and the crop arrivals have begun to pick up. And if the favourable weather condition persists, the crop in the coming months is likely to look up.

However, crops such as cardamom require huge amount of water and adequate amount of shade. The intermittent rains reported in several growing regions are reportedly not adequate to recharge the groundwater and ensure a good crop. But, we are only in the early part of the monsoon and consistent rains in the months ahead could very well change the outlook, farmers pointed out.

(thehindubusinessline.com)





Rubber price touches all-time high of Rs 173.50 a kg
Posted: 25 Jun 2010 01:03 AM PDT
NEW DELHI: The price of rubber today touched a new record high of Rs 173.50 per kg, mainly on account of high demand and tight supply.

"It is a new record. Heavy rains have affected rubber tapping and there is strong demand simultaneously from the domestic tyre industry," Rubber Dealers Association President George Valy said.

Also, growers are hoarding rubber as they expect prices to touch Rs 180 per kg, he noted, adding, "I will not be surprised if rubber quotes at Rs 175-176 a kg in a couple of days."

Valy said that growers could be holding on to 1.5 lakh tonnes of stocks as of now.

In addition to these factors, Cochin Rubber Merchants Association President N Radhakrishnan also attributed the movement in futures prices to the continuous rise in wholesale rates over the last five days.

On the National Multi-Commodity Exchange (NMCE), the July futures contract for the commodity reached a high of Rs 174.87 a kg before closing at Rs 172.41 per kg.

The price of natural rubber (RSS-4 variety) had stabilised at Rs 168-170.5 a kg only by the beginning of the month and remained within that range until June 19, after which it started rising steadily.

Over the last two months, rubber rates had been fluctuating between Rs 172 (the last all-time high level) and Rs 149 a kg.

Natural rubber production increased by 2 per cent to 54,600 tonnes in May, compared to 53,550 tonnes in the same month last year.

The Rubber Board has projected an output of 8.93 lakh tonnes for the 2010-11 fiscal, 7.4 per cent higher than 8.31 lakh tonnes in FY'10.

(economictimes.indiatimes.com)





Rise in spot rubber prices
Posted: 25 Jun 2010 01:02 AM PDT
On Thursday (24 June 2010), the spot rubber prices rose following the gains in the domestic and international rubber futures. Sheet rubber increased to Rs 173.50 from Rs 172 per kg though the tyre sector continued to stay back as usual.

The July futures for RSS 4 rose to Rs 174.67 (172.41), August to Rs 168 (167.40) and September to Rs 163.30 (162.68) per kg on the National Multi Commodity Exchange.

Spot rates were (Rs/kg): RSS-4: 173.50 (172); RSS-5: 171.50 (170); ungraded: 169.50 (168); ISNR 20: 154 (153) and latex 60 per cent: 122 (121).

(indiainfoline.com)




Spot rubber flares up on global cues


Kottayam, June 25

Physical rubber prices flared up on Friday as firm international markets added cheer to the domestic sentiments. Sheet rubber rebounded to Rs 177 from Rs 173.50 a kg and there were no quantity sellers even at higher levels. The trend was mixed as latex finished unchanged with comparatively low volumes.

Futures improve

RSS 4 improved with the July series rising to Rs 177.85 (174.65), August to Rs 170.50 (168.12), September to Rs 165 (163.21) and October to Rs 162 (160.21) a kg for RSS 4 on the National Multi Commodity Exchange. On the Tokyo Commodity Exchange , the July futures for RSS 3 increased to ¥363.7/Rs 188.04 (¥356.7), August to ¥340.2 (¥336.6), September to ¥319.9 (¥314.5), October to ¥397.7 (¥292.5) and November to ¥284.7 (¥280.9) while the December futures concluded the debut trading at ¥278.6 a kg during the day session. RSS 3 (spot) increased to Rs 169.98 (168.95) a kg at Bangkok.

Spot prices were (Rs/kg): RSS-4: 177 (173.50); RSS-5: 174 (171.50); ungraded: 172 (169.50); ISNR 20: 156 (154) and latex 60 per cent: 122 (122).



Rubber sector asked to face challenges
Our Bureau

Kochi, June 25

The rubber sector should equip itself to face the challenges posed by climate change, erosion in productive capacity of the soil and labour shortages, Mr Sajen Peter, Chairman of the Rubber Board, said.

Inaugurating the Rubber Grower's Conference 2010 at the Rubber Research Institute,he said that a permanent liaison of research and extension with the farming community is inevitable to orient the research and extension of the Board.

Dr James Jacob, Director of RRIL, who presided over the function observed that the increased interest in rubber cultivation shown by the younger generation is a welcome sign. The conference was organised with a view to collecting and compiling the experience of growers, who have either adopted age-old indigenous knowledge to suit their rubber cultivation or successfully conducted their own trials and experiments – thereby creating new models that can be simulated and replicated elsewhere. Growers as well as scientists and extension officers attended the conference.



Record rubber price

Kottayam: Natural rubber price rallied to a record Rs.176 a kg in the domestic market here on Friday, as demand from the automobile industry far outstripped supply. The highest price recorded this year was Rs.170.50 a kg on May 29. At the beginning of this month, the price was quoted at Rs.168 a kg and it grew steadily and reached the highest level on Friday, traders said. The price of RSS-4 variety stood at Rs.174 a kg on Thursday. Prices had registered an upward trend since the past three years. A decade ago, rubber price was Rs.25 a kg. (The Hindu)




LDF calls dawn-to-dusk hartal

Special Correspondent


Vaikom Viswan
THIRUVANANTHAPURAM: The ruling Left Democratic Front (LDF) has called a dawn-to-dusk hartal on Saturday to protest against the hike in the prices of petroleum products and the United Progressive Alliance (UPA) government's decision to decontrol petroleum product pricing.

The LDF State committee decided to organise the hartal at a hurried meeting held here close on the heels of the Centre announcing its decision to decontrol petroleum product pricing and to effect a sharp increase in the prices of petrol, diesel, cooking gas and kerosene.

Briefing reporters after the LDF panel meeting here on Friday, front convener Vaikom Viswan termed the UPA government's decision a major blow, particularly to the people of Kerala who were dependent on goods brought in from different parts of the country. He came down heavily on what he termed attempts of Congress leaders to justify the Central decision and their demand that the State should forego the additional revenue from the price hike so that the impact of the price hike could be made lighter.

“How can they take the brief to defend a decision that hurts the people of Kerala? Where is the question of foregoing the additional revenue if there is no price increase at all? It is most unfortunate that persons like Leader of the Opposition Oommen Chandy are coming up with such arguments,” Mr. Viswan said and pointed out that this was the third hike in petroleum prices effected by the UPA government within the last one year.

The LDF convener said of greater importance than the price hike was the decision to do away with the system of administered pricing of petroleum products. Mr. Viswan said there was no merit in the contention that the prices of petroleum products would come down depending on the market movements as prices that went up never came down.




Truck rentals set to rise 5%
Vehicle shortage, buoyant economy to boost demand.



Mumbai, June 25

Road freight rates will go up by nearly 5 per cent per cent with immediate effect following the Rs 2-a-litre hike in diesel prices.

“An immediate impact is bound to be there,” said Mr S.P. Singh, Co-ordinator, Indian Foundation of Transport Research and Training (IFTRT).

As a result, truck rental for a nine-tonne payload from Mumbai-Delhi-Mumbai will increase to Rs 50,500 from Rs 48,100. Similarly, a Delhi-Chennai-Delhi trip's rental will work out in excess of Rs 80,000 from Rs 76,200.

For freight operators, fuel accounts for 60 per cent of operating costs, followed by tyres at 30 per cent.

Truck rentals had gone up by 3 to 5 per cent in May-June. IFTRT, which tracks the prices every month, said the steep increase in cargo offerings from fresh summer fruits, vegetables and wheat crop along with double-digit growth in manufacturing sector and foreign trade pushed up the freight rate.

Rentals have also flared up due to the 12-15 per cent hike in tyre prices during the last three months.

Mr Singh said the prices had jumped 22-25 per cent since last November. He, however, does not see freight demand falling.

“The economy is buoyant. There is a 17 per cent growth in the manufacturing sector. Export-import cargo movement went up by 25-30 per cent. This has caused an increase in road freight cost. Certain market situations could determine future rate hikes,” said Mr Singh.

The shortage of trucks is compounding the rate increase. Of the over 16 lakh vehicles operating on inter-State routes, nearly 10 per cent could not have their national permits renewed following the confusion on emission norms, says IFTRT.