Rise in spot rubber prices continues

Rise in spot rubber prices continues

Kottayam, July 29

Spot rubber firmed up further on Thursday.

The market moved up following gains in futures on speculation that the demand in China, the world's largest consumer, would keep growing, along with the expansion of the tyre output in the nation.

Sheet rubber advanced to Rs 185.50 from Rs 185.00 on covering purchases. The Rubber Board's rate for the grade was Rs 184.00 (Rs 183.50 ) a kg.

FUTURES FIRM

The trend was mixed. The NMCE rubber futures were firm on early trades but it shed the gains partially later, selling at higher levels. The near-month August series hit a high of Rs 187.00 and a low of Rs 183.50 a kg during the session.

The August futures improved to Rs 185.59 (Rs 184.04), September to Rs 169.10 (Rs 168.79), and November to Rs 160.50 (Rs 160.10). The October series slipped to Rs 160.49 (Rs 161.21) per kg for RSS 4.

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The grade closed at Rs 149.72 (Rs 149.04) a kg at Bangkok.

Spot rates (a kg) were: Rs 185.50 (185.00) for RSS-4; Rs 179.50 (Rs 179.00) for RSS-5; Rs 170.00 (Rs 169.00) for Ungraded; Rs 157.00 (Rs 157.00) for ISNR 20; and Rs 110.00 (Rs 111.00) for Latex 60 per cent.



Rubber Climbs to Two-Week High as Chinese Demand May Expand
Posted: 28 Jul 2010 11:26 PM PDT
By Aya Takada

July 29 (Bloomberg) -- Rubber advanced to a two-week high on speculation that demand in China, the world’s largest consumer, will keep growing after Sumitomo Rubber Industries Ltd. said it will expand tire output in the nation.

Futures in Tokyo climbed as much as 1.9 percent to the highest level since July 12. The price has gained 1 percent in July, heading for the first monthly advance since March.

Sumitomo Rubber, Japan’s second-largest tire maker after Bridgestone Corp., will invest $297 million to set up a factory in Hunan province, the company said in a statement yesterday. It will be the company’s second factory in China and start production in July 2012, it said.

“The news added to expectations that China’s raw-material demand will continue to grow, backed by a rapid expansion in the nation’s economy,” Hisaaki Tasaka, an analyst at broker ACE Koeki Co. in Tokyo, said today by phone.

January-delivery rubber increased as much as 5 yen to 273.6 yen per kilogram ($3,133 a metric ton) on the Tokyo Commodity Exchange before trading at 272 yen at 11:10 a.m. local time.

Gains in futures were limited as Asian stocks extended a global decline after the Federal Reserve said U.S. economic growth slowed in some areas, raising concern that the recovery of the world’s largest economy may weaken.

“Economic activity has continued to increase, on balance, since the previous survey,” the central bank said in its Beige Book business survey, noting that two of the Fed’s 12 districts reported the economy “held steady” and two said the pace of expansion slowed.

‘Unusually Uncertain’

The report underscored the Fed’s view that the recovery, while still moving forward, is progressing at a slower pace than earlier in the year. Fed Chairman Ben S. Bernanke said in congressional testimony last week that the central bank expects “continued moderate growth” and noted that the economic outlook remains “unusually uncertain.”

In the cash market, Thai prices advanced yesterday on speculation that heavy rains in the nation’s rubber-growing southern provinces may limit supply, according to the Rubber Research Institute of Thailand. The price added 0.2 percent to 102.4 baht ($3.18) per kilogram.

January-delivery rubber on the Shanghai Futures Exchange gained 0.9 percent to 23,525 yuan ($3,470) a ton.

(bloomberg.com)





Tight supplies to keep rubber prices steady
Posted: 28 Jul 2010 11:24 PM PDT
KOCHI: The global prices of natural rubber will remain steady in the medium term on account of tight supplies and growing demand.

Abdul Aziz, secretary general, International Rubber Research and Development Board (IRRDB), said the natural rubber situation is not likely to see any significant change in the medium term.

However, countries like Vietnam, China, Cambodia and Laos are increasing the area under rubber. By the second half of this decade, Vietnam could emerge as a major player surpassing both India and Malaysia, he said.

Mr Aziz said production in the Asian countries has been affected by labour shortage and climatic changes. An increase in production is also limited by large-scale replanting in the leading producers. Mr Aziz was speaking to ET on the sidelines of the international workshop on ‘Climate Change and Natural Rubber Cultivation Research and Development Priorities’ jointly organised by the Rubber Research Institute of India (RRI) and IRRDB.

An expert on natural rubber, Mr Aziz was of the view that price stabilisation was not warranted as the current upsurge is shaped by the demand and supply factors.

Earlier in his keynote address Prof J Sreenivasan of Indian Institute of Science, Bangalore said studies showed that over the years there has been a decline in the rainfall in Kerala, the main rubber producing region.

Dr James Jacob, director, RRI, in his paper, ‘Impact of Climate Change on Natural Rubber Productivity in Different Agro-climatic Regions in India’, pointed out that the productivity of rubber plantations in the state was on the decline due to rising temperature.

According to him, a one degree increase in temperature will result in a 15% fall in productivity. It is in this context that the RRI is developing new heat resistant clones of natural rubber. The productivity of NR in the country declined to 1,784 kg per hectare per year in 2009-10 from 1,867 kg during 2008-09.

(economictimes.indiatimes.com)





High input costs halve MRF net
Posted: 28 Jul 2010 11:24 PM PDT
CHENNAI: Increased raw material costs, especially natural rubber and employee costs, along with interest charges pulled down MRF’s net profit by 51% to Rs 61.6 crore in the third quarter ended June 30, 2010 against Rs 125.7 crore in the year-ago period. The board has approved the payment of interim dividend of Rs 3 per equity share.

However, buoyancy in the auto sector and greater demand in the replacement market for tyres helped the company to lift net sales 34.2% to Rs 1,924.4 crore against Rs 1,433.6 crore in the year-ago period.

The other operating income was less at `96 lakh against Rs 4.7 crore in the year-ago period. In the first nine months, MRF reported a higher net profit of Rs 276.8 crore against Rs 156.1 crore in the same period in the previous year. Net sales improved to Rs 5,345.9 crore against Rs 4,189.6 crore in the year-ago period.

In the first nine months, the company has surpassed the net profit of Rs 253 crore, reported during the year ending September 30, 2009 on net sales of Rs 5,663.8 crore.

MRF executive V-P marketing, Koshy Varghese said despite robust sales, the profits took a beating in Q3 due to high cost of natural rubber. During the quarter, consumption of raw materials increased 78% to Rs 1367.1 crore against Rs 766.7 crore in the year-ago period.

Employees’ cost increased to Rs 102 crore, interest Rs 19.7 crore against Rs 11.5 crore in the year-ago period. Tax liability was lower at Rs 87.5 crore against `188.1 crore in the year-ago period.

With the Government allowing users to import tyres at lower duty, the company found it difficult to increase the prices to recover the additional cost on inputs and the operational expenses. Stating natural rubber prices in the international market are lower compared with domestic prices, he hoped the government will reduce import duty on material.

(economictimes.indiatimes.com)





Rise in spot rubber prices
Posted: 28 Jul 2010 11:23 PM PDT
On Wednesday (28 July 2010), the spot rubber prices rose as the market continued to suffer from short supplies. Sheet rubber increased further to Rs 185 from Rs 183.50 per kg on fresh buying and short covering. Latex 60% declined further due to low demand.

The August futures for RSS 4 declined to Rs 184.02 (184.66), September to Rs 169 (171.86), October to Rs 161.40 (161.71) and November to Rs 160.39 (160.49) a kg on the National Multi Commodity Exchange.

Spot rates were (Rs/kg): RSS-4: 185 (183.50); RSS-5: 179 (178); ungraded: 169 (168); ISNR 20: 157 (156.50) and latex 60 per cent: 111 (112).

(indiainfoline.com)