Mixed trend in spot rubber

Mixed trend in spot rubber

Kottayam, July 6

Spot rubber witnessed a mixed trend on Tuesday. The market was under pressure as buyers stayed away from most of the grades but sheet rubber closed unchanged at Rs 182.50 a kg for the third consecutive day amidst dull volumes.

Among other developments, there was speculation that supplies from Thailand, the largest exporter, may gain leading to a bearish trend in the days ahead. The domestic rubber futures were uncertain today.

Futures firm

The July series concluded at Rs 185.30 (185.50), August at Rs 176.24 (175.24), September at Rs 167.50 (166.63) and October at Rs 162.01 (162.79) a kg for RSS 4 on the National Multi Commodity Exchange. The July futures for RSS 3 closed at ¥344.4\Rs 183.59 (¥344.3), August at ¥313 (¥314.1), September at ¥299.7 (¥297.3), October at ¥279.1 (¥275.6), November at ¥271.1 (¥269.1) and December at ¥268.1 (¥266.6) a kg during the day session on the Tokyo Commodity Exchange. RSS 3 (spot) slipped to Rs 162.53 (162.62) a kg at Bangkok.

Spot rates were (Rs/kg): 182.50 (182.50); RSS-5: 177 (178); ungraded: 174.50 (176); ISNR 20: 160 (160) and latex 60 per cent: 127 (127).




Rubber Erases Losses on Speculation China, Japan May Rebuild Inventories
Posted: 06 Jul 2010 05:19 AM PDT
Rubber advanced on optimism that Japan and China may soon replenish their inventories and that supplies in Thailand, the largest exporter, remain limited.

“On fundamental aspects, declining stocks in Japan and low level of inventories in China supports optimism they will soon replenish inventories,” said Varut Rungkhum, analyst at Bangkok-based commodity broker Agro Wealth Ltd.

The December-delivery contract rose as much as 1.3 percent to 270 yen per kilogram ($3,077 a metric ton) before settling at 268.1 yen on the Tokyo Commodity Exchange. Futures fell as much as 2 percent as the slowdown in China’s car sales growth stoked concern that demand may weaken from the world’s largest user.

November-delivery rubber on the Shanghai Futures Exchange lost 0.4 percent to settle at 21,525 yuan ($3,177) a ton.

Crude rubber stockpiles held at Japanese warehouses fell 8.9 percent to 3,247 tons on June 20, according to data from the Rubber Trade Association of Japan.

China’s natural-rubber inventories increased 1,211 tons to 15,982 tons last week, based on a survey of 10 warehouses, the Shanghai Futures Exchange said on July 2. Still, stockpiles have slumped 89 percent this year.

“The tight supply situation continues for a while,” said Hiroyuki Kikukawa, general manager of research at Tokyo-based IDO Securities Co.

Rain in southern Thailand has disrupted tapping, limiting supplies, the Rubber Institute of Thailand said today.

The benchmark price in Thailand was unchanged at 112.60 baht ($3.47) a kilogram, according to the Rubber Institute of Thailand, which issues new data in the afternoon. Auctioned prices of ribbed smoked sheets fell 0.1 percent to 107.20 baht.

Tight global supplies and strong demand, especially from China, will support prices, the Association of Natural-Rubber- Producing Countries said in its June newsletter. China’s gross import of natural rubber is projected to climb 5 percent this year to 1.67 million tons, the association said.

The possibility of a “marked improvement” in supply in the short term is limited given aging trees and weather constraints, the association said June 30.

(bloomberg.com)





Rubber Futures in Tokyo Drop as Much as 2% as Oil Decline Reduces Appeal
Posted: 06 Jul 2010 05:18 AM PDT
Rubber futures in Tokyo declined as much as 2 percent as a drop in crude oil reduced the appeal of the commodity. The December-delivery contract fell to 261.4 yen per kilogram before trading at 262.8 yen on the Tokyo Commodity Exchange at 10:07 a.m. local time.

(bloomberg.com)





Higher Natural Rubber Prices Impact Chinese Tyre Industry
Posted: 06 Jul 2010 05:16 AM PDT
As per the latest updates from Association of Natural Rubber Producing Countries, prominent problems in Chinese tyre industry are the substantial growth of cost and the decline of profit growth rate. Firstly, the prices of raw materials see considerable growth. In April 2010, the price of natural rubber reached about 25,900 CNY/ton, rising by over 100% YOY. Secondly, the expenses on water, electricity and gas rise continuously. Thirdly, the labor cost is increasing significantly.

According to the investigation of China Research and Intelligence, transnational enterprises adjusted their tyre prices successively since 2009Q4 and the average price growth rate is over 10%. In May 2010, another group of transnational enterprises declared to raise the tyre prices by 5%-8%.

Chinese tyre enterprises also increased the domestic sales price and export price of tyres at the end of 2009 and the beginning of 2010, but the growth rate is only 3%-5%. On the whole, tyre price increase of domestic enterprises is in slow progress.

Presently, Chinese tyre industry is confronted with prominent product structural inconsistency, severe homogeneity, inadequate production capacity for new products (e.g. environmentally-friendly & safety tyres) and blind expansion of low-end products. Therefore, production capacity expansion and low-level redundant construction have to be prevented.

Furthermore, the international trade conflict will be more frequent in 2010, so Chinese tyre export situation is still gloomy. The high special safeguard tariff of 35% by USA will affect China's tyre export to USA severely.

China has promised to reduce the carbon dioxide emission per unit GDP by 40%-45% in 2020 compared with that in 2005. It is predicted that many expenses will be increased. There will be a huge cost for carbon emission reduction in China. Besides, the pressure for CNY appreciation is growing. Since 2005, CNY has appreciated by near 20%.

According to investigation, when CNY appreciates by 1%, the export profit rate of tyre will drop by 1%. The average profit rate of tyre export is only 3%-5%. Moreover, China will keep the macroeconomic policy continuous and stable in 2010. The government will continue to implement the proactive fiscal policy and moderately easy monetary policy.

The national urbanization development will continue to promote the development of highway, automobile and real estate industries. The auto production is expected to reach 15.50 million in 2010 with the growth rate of 15% YOY. The auto reserving volume will exceed 80 million. Thus, the tyre demand in Chinese market will be further enlarged. All these will support the development of the tyre industry.

(indiainfoline.com)





Is speculation fuelling the spike in rubber prices?
Posted: 06 Jul 2010 05:15 AM PDT
Rubber prices have more than doubled in a year, hitting a record Rs180 per kg, leaving consumers, mainly tyre companies, in a quandary. Is there a demand-supply gap or is it financial muscle in the commodities market at play, or perhaps a mix of both?


Graphic by Yogesh Kumar/Mint
Commodity market experts say that the divergence between the spot prices and the near-month prices has doubled to Rs5 a kg—a pointer to higher speculation. The Rubber Board of India says that nearly 250,000 tonnes of rubber stock that has not made its way to the market is available with growers and dealers, the lure of higher prices leading to hoarding.

At the bottom, though, is a demand-supply mismatch. Demand in fiscal 2011 is expected to grow by 20% over the previous year. Meanwhile, truant weather conditions in Kerala, which produces nearly 90% of India’s rubber, have hindered supply from matching demand. Analysts say that the average productivity in rubber plantations is down by 1,000 tonnes a ha.

Then there’s the inverted duty structure, which prevents tyre makers from importing rubber. “We face the anomaly where natural rubber attracts a customs duty of 20%, but finished goods can be imported at 10%,” says
Neeraj Kanwar, chairman, Automotive Tyre Manufacturers’ Association, and managing director, Apollo Tyres Ltd. With buoyant demand, domestic prices of sheet rubber is higher by Rs10-15 per kg than international prices. In the recent past, the latter had been higher by Rs5-8 per kg.

The global shortfall in production adds fuel to this fire. Thailand, the world’s largest producer of natural rubber, claims lower output due to heavy rainfall, which hinders tapping.

On the demand side, vehicle sales have seen high annual growth in China, Japan and other Asian countries. China is estimated to increase rubber imports to 1.7 million tonnes (mt) in 2010 from 1.5 mt last year. These factors point to rubber prices continuing to be high this season. Tyre makers have increased replacement market prices by nearly 9% in the last three months, but still lament the impact on profitability.

Analysts are factoring in a reduction in operating profits of these companies by nearly 2-3 percentage points in the June quarter. “The time lag between increase in rubber prices and the actual price increase in tyres results in lower margins down the line,” points out Ramnath S., director, research, IDFC Securities Ltd.

(mintmoney.livemint.com)





Cambodian Rubber Exports Slide Sharply In First Five Months Of 2010
Posted: 06 Jul 2010 05:14 AM PDT
As per the latest updates from Association of Natural Rubber Producing Countries, Cambodian rubber exports dropped more than 34 percent in the first five months of this year compared with the same period in 2009, according to official figures from the Cambodia Import, Export, Inspection and Fraud Repression Department. Data released on Friday (July 2) show a 34.19 percent drop in exported rubber, from 13,057 tonnes to 9,730 tonnes, and growers blame harsh weather for reducing production during the first five months of the year. The official added that Cambodia had missed out on benefits from high prices because it exported most of its rubber to Vietnam.

The price of the highest-quality rubber, classified as grade 1 of 10, hit US$3,687.50 per tonne last week on the Malaysian Rubber Exchange. Grade 10 rubber reached $2,868.

In a bid to raise rubber production to 150,000 hectares by 2015, Cambodia inked a memorandum of understanding with Vietnam in September last year, offering 100,000 hectares in land concessions to 14 Vietnamese companies operating in Mondulkiri, Ratanakkiri, Kampong Thom Kratie and Preah Vihear provinces.

Vietnamese companies grew rubber on 10,000 hectares of land in Cambodia last year and planed to add 20,000 more by the end of 2010, some 30,000 hectares in 2011 and 40,000 hectares in 2012, according to the memorandum.

(indiainfoline.com)





Synthetic rubber production increases by 10 p.c.
Posted: 06 Jul 2010 05:12 AM PDT
Synthetic rubber production has rebounded in the last fiscal rising 10 per cent to 1.06 lakh tonnes, according to the Rubber Board data.

In the previous fiscal, production had dipped by nine per cent to 96,739 tonnes.

During 2009-10 fiscal, synthetic rubber consumption increased to 3.4 lakh tonnes registering a growth of 18.7 per cent against a negative growth of 1.4 per cent in the previous fiscal.

Consumption of the rubber by the automotive tyre sector, which accounts for more than half of synthetic rubber use in the country, increased by 28.7 per cent to 2.38 lakh tonnes in 2009-10, against 1.85 lakh tonnes in the previous fiscal.

The relative share of consumption of natural rubber and synthetic rubber in India changed to 73:27 during 2009-10 fiscal from 75:25 during 2008-09 fiscal, the board said.

Import of synthetic rubber by the rubber goods manufacturing industry during 2009-10 increased to 2.5 lakh tonnes compared to 1.9 lakh tonnes during 2008-09.

(thehindu.com)