Rubber Declines for Fourth Day as Crude Oil Retreat Curbs Demand for Tires

Rubber Declines for Fourth Day as Crude Oil Retreat Curbs Demand for Tires
Posted: 30 Jun 2010 09:54 PM PDT
Rubber slumped for a fourth day as crude oil extended losses, reducing the appeal of the commodity used to make tires.

Futures in Tokyo fell as much as 2.4 percent to the lowest level in almost three weeks. Oil, base metals and Asian stocks dropped after China’s manufacturing growth slowed and Moody’s Investors Service placed Spain’s credit rating on review for a possible downgrade.

“Concern over the slowing global economy kept putting downward pressure on industrial commodities and equities,” Takaki Shigemoto, an analyst at JSC Corp., said today.

December-delivery rubber lost as much as 6.4 yen to 262.8 yen per kilogram ($2,982 a metric ton), the lowest since June 11, on the Tokyo Commodity Exchange, before trading at 264.2 yen as of 12:47 p.m. The price dropped 12.7 percent in the second quarter, the first loss since 2008.

Crude oil fell for a fourth day in New York, with the price for August delivery declining as much as 1.3 percent o $74.63 a barrel after reports from the U.S. showed companies added fewer workers in June than forecast and an unexpected increase in gasoline stockpiles in the largest energy consumer.

Copper in London fell as much as 1.3 percent to $6,430.75 a ton and the MSCI Asia Pacific Index dropped as much as 1.4 percent to 111.18.

China’s manufacturing expanded at a slower pace for a second month in June, adding to signs that growth in the world’s third-largest economy is moderating. The Purchasing Managers’ Index fell to 52.1 from 53.9 in May, the Federation of Logistics and Purchasing said today. That was less than the median 53.2 estimate in a Bloomberg News survey of 12 economists.

November-delivery rubber on the Shanghai Futures Exchange fell 2 percent to 21,160 yuan ($3,119) a ton at the 11:30 a.m. local time break. China is the world’s largest auto market and the biggest consumer of natural rubber.

(bloomberg.com)





Growth in global rubber output seen muted
Posted: 30 Jun 2010 09:52 PM PDT
C.J. Punnathara

Kochi, June 30

The Association of Natural Rubber Producing Countries (ANRPC) has lowered the growth forecast in global rubber production from 6.3 per cent to 5.2 per cent for 2010.

The prime reason attributed for the lower production is because large areas of rubber trees which were planted in 1980s are expected to become less productive and senile.

Also, the weather conditions are expected to be less than favourable in several rubber growing regions of the world during the current year. Demand for rubber is expected to pick up worldwide as the global economic recovery is reportedly gaining pace. As a result, demand for automobiles, especially from the Asian region, is expected to rise sharply in the coming months.

The firm price trends are expected to be sustained into the coming months. These are not happy tidings for the rubber industry which has had to absorb increased raw material costs.

Meanwhile, rubber is not available in the domestic markets even at Rs 183 today, Mr N. Radhakrishnan, former President of the Cochin Rubber Merchants Association, said. After a respite of a single day, futures prices have also moved up.

The Indian government should permit limited rubber imports at lower duty. Or else, the Chinese might import all the rubber from the global markets and India tyre industry may not have sufficient quantity of this vital raw material, he added. Also, deviating from the normal trend observed year after year, the global supply of natural rubber continued to be tight into June this year.

Under normal conditions, supply from all major producing countries usually eases up from April as farmers resume harvesting after the winter rest for the trees, the ANRPC said.

Chinese contribution

To compound the demand-supply deficit, China, which was largely staying away from the market in April/May has re-entered the market as a big buyer in June, resulting in the prices remaining firm. The firm trends in the global commodity markets have been backed by partial float and strengthening of Chinese Yuan and the perception that the global economic recovery is gaining pace.

China accounted for close to 37 per cent of the global rubber demand in 2009. Meanwhile production shortfalls are being reported from several countries on account of adverse weather conditions.

There have been reports that Indonesia's output in June has been affected by continued and unusual rains. Thailand's production fell by 13.3 per cent in April on account of extended wintering.

(thehindubusinessline.com)





Dunlop, Falcon to raise tyre prices on rubber spike
Posted: 30 Jun 2010 09:49 PM PDT
MUMBAI: Tyremakers Dunlop India and Falcon are looking to raise product prices for a second time in a month as rubber prices soar, threatening margins, a senior company official said on Wednesday.

"We raised prices in the beginning of June between 2-4 percent in different tyre categories. We are thinking once again of raising prices," Pawan Kumar Ruia, chairman of Ruia Group, which owns both companies, said in an interview.

(economictimes.indiatimes.com)





Significant Gain In Domestic Rubber Futures
Posted: 30 Jun 2010 09:47 PM PDT
Domestic Rubber futures gained significantly on strong domestic demand against the tight supply situation. Benchmark July 2010 contract on NMCE surged Rs 512 or nearly three percent to Rs 18349 per 100 kg. The counter is now trading with smart gains nearly the session high.

India's natural rubber prices made a new record recently on the back of reduced arrivals due to monsoon in Kerala and tight demand-supply condition.

It is a new record, heavy rains have affected rubber tapping and there is strong demand simultaneously from the domestic tyre industry”, leading dealer from Kottayam reported.

ANRPC Outlook Remains Strong
As per the latest updates from the Association of Natural Rubber Producing Countries, chances of improvement in supply seem to be remote, demand is likely to gain further strength in the short and medium terms thanks to a renewed outlook for global economic recovery.

Potential further strengthening of the baht and the ringgit on China's loosening stance on the Yuan could be another factor supporting rubber prices. China's policy on the Yuan offers scope for increased demand from the country in the end.

As supply remains tight and demand strong, unhealthy speculation may come into picture causing short-lived bubbles in the market. However, large extent of rubber trees cultivated from 2005 onwards offers possibility of an improvement in supply after 2011. At the same time, if largely farmers go for replanting their low yielding aged trees, mostly planted during 1980s, the expected improvement in supply need not take place.

Global supply of natural rubber would grow only slower this year than the rate anticipated earlier. Forecasts based on preliminary estimates and reports available up to mid-June, point to a 5.2% growth, lower than the 6.3% rate anticipated in March and 6.1% rate anticipated in May.

Data and estimates available up to May 2010 reveal that the demand for natural rubber is strong in China, India and Malaysia. About 47% of the global consumption of natural rubber during 2009 was in these members of the ANRPC.

Rubber Futures Dip In Global markets
Key Tokyo rubber futures fell on Wednesday, hurt by a broad slide in commodities the previous day when fears over the outlook for the global economy prompted investors to refrain from taking risks. Traders expect upward price pressure on supply shortage to lift the TOCOM spot contract in the next couple of months. That could possibly also help raise futures prices across the curve.

Rubber futures in the benchmark Tokyo commodity Exchange plunged sharply today. The December 2010 contract touched the low of 266.50 Yen a kg and ended the session lower by 5.2 yen at 269.50 yen a kg.

Rubber November futures in China's Shanghi futures ended the session lower by CNY 150 at CNY 21585 tonne.

(indiainfoline.com)





Vietnam June Rubber Export Down
Posted: 30 Jun 2010 09:46 PM PDT
By Anant Thawatchaipracha

30 June 2010 - The estimated export volume of rubber from Vietnam in June was 55,000 metric tons, down 20% compared with the same month in the previous year, according to the Vietnam General Statistics Office.

However, in terms of value it was estimated to be higher by 58.6% or $157 million compared to $99 million in the same month the previous year.

It was also reported that from January to June, the country exported an estimated 237,000 tons of rubber valued at $652 million, a 6.1% decrease in terms of volume but an 81.3% increase in terms of value.

(Irco.biz)





Japan's NR Stock Down
Posted: 30 Jun 2010 09:38 PM PDT
By Anant Thawatchaipracha

30 June 2010 - The total natural rubber stock of Japan was 12.1% down from 4,054 metric tons on May 31 to 3,563 metric tons on June 10, according to the Rubber Trade Association of Japan.

The inventory has been steadily declining for the last few months. The current level is 31.9% lower than the 5,229 metric tons reported on April 30.

No reasons were given for the changes but outsiders attributed them to tight physical supply in producing regions, consumption of existing stocks due to high import prices, and recent exports to China.

(Irco.biz)





Global Tyre Sale to Improve in 2010
Posted: 30 Jun 2010 09:37 PM PDT
By Siwaporn Bumroongpan

29 June 2010 – The demand for global tyre sales volume will continue to recover in 2010 boosted powerfully by industry performance which impacted the tyre sectors to reach a turning point after a downturn trend in 2008 and 2009, but still below the 2007 level due to the rising natural rubber prices.

New tyre sales in the consumer market are expected to increase 21% from 2009 in the U.S. and 5% in Europe whilst new tyre sales in the commercial market are expected to grow 7.5% in the U.S. and 40% in Europe.

Consumer replacement tyre sales growth in U.S. is projected at less than 1% while in Europe it should rise at least 1%.

Tyre demand in the rest of the world is expected to grow in line with the economic development of the developing countries like China and India, which are forecasted to grow at 9.9% and 7.8%, respectively.

About 54% of the $140 billion global tyre market is shared between the five major tyre companies, namely Bridgestone Corp. of Japan, Michelin SCA of France; Continental AG of Germany, U.S.-based Cooper Tire & Rubber Co. and Goodyear Tire & Rubber Co.

(Irco.biz)