Rubber Drops as China's Slower Car Sales Growth Increases Demand Concern

Rubber Drops as China's Slower Car Sales Growth Increases Demand Concern
Posted: 11 Jul 2010 10:50 PM PDT
Rubber declined for a second day after data showed car sales growth in China slowed, raising concern that demand may weaken from the largest consumer of the commodity used to make tires.

Futures in Tokyo dropped as much as 1.5 percent after advancing last week by 2.4 percent. Today’s losses were limited as the Japanese currency weakened after the party of Prime Minister Naoto Kan lost control of Japan’s parliament’s upper house, boosting the appeal of yen-based contracts.

Sales of cars, sport-utility vehicles and multipurpose vehicles in China, the largest auto market, rose 19 percent from a year earlier to 1.04 million last month, the China Association of Automobile Manufacturers said July 9. It was the slowest pace since March 2009 as dealers’ inventories rose after inflation quickened in May to an annual 3.1 percent rate, the fastest in 19 months, reducing buyers’ spending power.

“Concern about Chinese car sales put a drag on rubber futures,” Kazuhiko Saito, an analyst at Tokyo-based commodity broker Fujitomi Co., said today by phone.

December-delivery rubber lost as much as 4 yen to 269 yen per kilogram ($3,018 a metric ton) before trading at that price on the Tokyo Commodity Exchange at 10:59 a.m.

China’s passenger-car sales have risen every month since February 2009 after the government halved the consumption tax on small vehicles to 5 percent the preceding month as part of an economic stimulus package. Vehicle demand surged 46 percent to 13.6 million last year, surpassing the U.S. for the first time.

Tax Increase

The small-car sales tax was raised to 7.5 percent this year, and June was the third straight month of slowing demand. Monthly sales may decline from year-earlier levels during the second half of 2010, Credit Suisse Group AG analysts Adrian Chan and Hung Bin Toh wrote in a report on May 26.

The yen was at 89.10 per dollar at 10:38 a.m. in Tokyo from 88.62 last week. The ruling Democratic Party of Japan won 44 seats in yesterday’s election, compared with 51 for the opposition Liberal Democratic Party, according to public broadcaster NHK. The result may undermine the ruling party’s efforts to cut the world’s largest public debt.

Cash-rubber prices have been pressured by delays in orders from Chinese buyers and worries over a global economic slowdown, according to the Rubber Institute of Thailand. The benchmark price in Thailand remained unchanged at 112.85 baht ($3.49) a kilogram on July 9.

November-delivery rubber on the Shanghai Futures Exchange lost 0.2 percent to 22,060 yuan ($3,257) a ton at 9:40 a.m. local time.

China’s natural-rubber inventories rose 3,429 tons to 19,411 tons, the bourse said on July 9, based on a survey of 10 warehouses. It was the second weekly increase after reaching the lowest level since January 2003.

(bloomberg.com)





Natural rubber price hits record high
Posted: 11 Jul 2010 10:49 PM PDT
KOTTAYAM: The price of various grades of natural rubber soared to another all time record, while RSS4 clicked Rs 186 a kg in the domestic market on Friday, as a few unidentified market players continued to pull strings to jack up the rates, even when the international RSS3 price was locked at Rs 163.36 a kg in the Bangkok market on Friday's transactions.
Rumours are being spread in the domestic market that the price will reach Rs 200 a kg shortly, which is also said to be influencing the growers to hold their stocks. Arrivals in the market are at a bare minimum, leaving consuming industries gasping, though rumours spread that large scale crumb imports are in the offing during the coming weeks. There is heavy demand from consuming industries for the raw material, though they claim sufficient stocks for a couple of months ahead.
People connected with the domestic market are closely watching the recommendations by the Union Commerce Ministry through the Rubber Board, which has been asked by the Delhi High Court to submit, on a petition filed on behalf of the consuming industries. The deadline set by the court for creating a panel comprising various stakeholders and forwarding the recommendations on the pleas of consuming industries, such as liberal imports, is July 17.
The Rubber Board chairman is already in New Delhi to finalise the recommendations, on the basis of the discussions held with various groups here.
Market observers have cautioned rubber growers again on the practice of abnormal levels of stocks with them, since the domestic rates have been always lower than the international rates even during lean production months in the past. Apprehensions are there that the higher domestic price prevailing now, an increase to the extent of Rs 23 a kg, would undermine the interests of growers in the long run, especially since industries are keen to have their say on the basis of statistics.
In 1996 and 2008, the prices of RSS4 had climbed to Rs 76 and Rs 142, respectively, but it nosedived to Rs 19.50 and Rs 59, respectively, within a period of just three months.

(expressbuzz.com)





Kerala planters happy with soaring rubber prices
Posted: 11 Jul 2010 10:47 PM PDT
July 10 (IANS) Planters in Kerala are a happy lot with the soaring prices of natural rubber which are hovering around an all-time high of Rs.182 a kg as demand from the automobile industry is far outstripping the supply.

K.G. Thomas, a retired state government employee, says this is a moment to cherish. 'You wait and see, it will soon touch Rs.200.'

'I own eight acres of rubber plantation, which I inherited from my father. I began cultivation of rubber in 1973. I have never had to look back all these years with my rubber plantation. Even when prices were rock bottom, when many cut down rubber trees and planted coco beans plants, I held on and will do it till the rest of my life,' said Thomas.

India stands fourth in the list of global producers of rubber with a nine percent share. Kerala accounts for 81 percent of the rubber production in the country.

Production of rubber in Kerala jumped from 580,000 tonnes in 2000 to 691,000 tonnes in 2005. In 2009, it reached 783,000 tonnes.

But the plantation is vulnerable to seasonal fluctuations. At the onset of the monsoon, production slackens, resulting in reduced arrivals of rubber in the market, which boosts prices.

The Association of Natural Rubber Producing Countries said in its June newsletter that tight global supplies and strong demand, especially from China, will support high prices.

Rubber prices have been on an upward trajectory over the last five years. Four years ago, when rubber prices touched Rs.100 a kg, it was absolute joy for the growers in the state, because it was the first time that such a thing had happened. Since then it has been going up and up.

K. Manoj, a rubber dealer at Pathanamthitta, said rubber prices would cross Rs.225 a kg in the next quarter.

'Look at the vehicle sales across the globe, including India. It grew by around 30 per cent. Moreover, China, the world's largest importer of natural rubber, has announced that it would import more than 1.59 million tones which they did last year. Another favourable aspect is that heavy rains in Thailand, world's largest producer of rubber, will help the price of rubber go higher,' said Manoj.

Natural rubber finds its use mainly in tyres, making of beds, rubber bands and other products. In recent years, its appeal as an alternative to synthetic products made from petroleum has been increasing.

'I have been one of the first rubber band manufacturers in Kerala, way back in the early 1970s and now my main job is to supply rubber latex to these manufacturers. This sort of surge in prices is something unbelievable. Please don't forget the price was around Rs.26 in 1998. People should be cautious and watchful is all what I would say,' said Babu Jacob.

Although rubber is grown almost across Kerala, it is concentrated in the central districts. More than 15 percent of the 32 million population are fully dependent on rubber.

Following the rise in prices, the prices of land with rubber plantations have shot up from a mere Rs.2 lakh an acre a few years ago to around Rs.20 lakh now.

Meanwhile, rubber tappers, whose wages always go up when an increase in prices takes place, are demanding that their rate must go up from 70 paise per tree to a minimum of 80 paise per tree. In 2006, it stood at 40 paise per tree.

'Just look into the mounting expenses of all items in the market. And mind you we start tapping trees as early as 4 a.m and we move in the dark in the rubber plantations. This is a job with a lot of hardship. If you look now you will see many non-Keralites tapping rubber trees. The quality of our workmanship is far better than theirs. We have to be remunerated adequately,' said Baby, a second generation rubber tapper near Kochi.

(sify.com)





India Becomes 2nd Largest NR Consumer
Posted: 11 Jul 2010 10:45 PM PDT
By Siwaporn Bumroongpan

7 July 2010 – India has become the second largest consumer of natural rubber surpassing U.S. but after China, according to data released by the Rubber Board of India recently.

India has recorded a growth of rubber consumption in 2009 at 2.7% or 905,000 tonnes, up from 881,000 tonnes in 2008 while rubber consumption in U.S. declined by 34% dropping to 687,000 tonnes in 2009, compared with 1.04 million tonnes in 2008 due to the financial crisis.

China, the world’s largest rubber consumer, had rubber consumption in 2009 at 3.46 million tonnes, compared with 2.94 million tonnes in 2008.

Global natural rubber consumption declined by 7.7% to 9.39 million tonnes in 2009, down from 10.17 million tonnes in 2008.

India’s growth in rubber consumption was in tandem with the growth in its automobile sector which recorded a 13.4% growth in rubber consumption as compared to 2.5% growth in 2008-09. Total vehicle sales in 2009-2010 was 12,292,770 units compared with 9,724,243 units in the previous financial year.

The rise of tyre production during 2009-10 was 2.5% for truck and bus tyres and 21% for passenger car tyres.

(Irco.biz)





NR Can Gain From Stronger Yuan
Posted: 11 Jul 2010 10:44 PM PDT
By Anant Thawatchaipracha

9 July 2010 – Natural rubber could gain from China’s potential higher import demand arising from a strong yuan, the ANRPC said in its June bulletin released recently.

China accounted for about 37% of the global demand for natural rubber in 2009. Out of the total volume of 3.040 million tonnes of natural rubber consumed in the country in 2009, as much as 2.614 million tonnes or 86% was sourced from abroad.

In its comments over China’s announcement on 19 June that it would allow more flexibility in the exchange rate of the yuan, the ANRPC said that although the movement was likely to be gradual, over time, yuan is expected to appreciate against the US dollar.

It further added that a stronger yuan, while making exports less competitive, helps in making imports less expensive thereby promoting more import of raw materials. The new policy therefore would be more oriented towards making the Chinese economy less dependent on exports and more dependent on domestic consumption, helping the country leass vulnerable to external shocks.

There is then the potential influence on other Asian currencies. China’s potential higher import demand is likely to prompt investors to currencies such as Thai Baht, Malaysian Ringgit and Korean won, which are seen as proxies for China’s growth.

The yuan’s gains on 21 June led to appreciation of these Asian currencies against the US dollar and this indicates the possibility of bigger currency movements in the rest of Asia, including Thailand and Malaysia, which are China’s two major trade partners in sourcing natural rubber. A stronger exporting country currency generally helps natural rubber prices to rise in US dollar terms.

(Irco.biz)





Auto Sales Decline in June
Posted: 11 Jul 2010 10:43 PM PDT
By Siwaporn Bumroongpan

9 July 2010 – Auto sales in both the U.S. and China continued to rise in June but at a slower pace than the previous month, prompting analysts to say that this could be a sign of a cooling market for the second half of the year.

The recent slowdown in sales resulted from tax cuts in the small-car-purchase and other stimulus policies implemented amid the global financial crisis which seemed to have pulled purchases forward.

China's auto sales surged 30.45% year on year to 7.18 million units in the first half of the year, keeping China’s position as the world's largest auto market intact.

Auto sales of the major manufacturers rose in June from last year, with Toyota Motor Corp. reporting a 7.7% rise to 60,900 units, Nissan Motor Co. a 30% rise to 58,151 units, and General Motor Co. a 23% rise to 176,486 units.

Auto companies also reported increases in total auto sales in the first-half period which were also up from previous year. Toyota’s first half year total auto sales was up 27% to 362,300 units, Nissan was up 47% to 330,573 units, General Motor was up 49% to 1,209,138 units, Ford Motor Co. was up 53% to 301,524 units and Changan Ford Mazda Automobile Co., a three-way joint venture between Foad, Changan Automobile (Group) Co. of China and Mazda Motor Corp. of Japan, was up 46% to 205,563 units.

U.S. auto sales also grew in June from the depressed level of year earlier. Light vehicle sales rose 14% to 983,738 units in June up from last year, with major automakers posting some of their smallest gains of the year amid signs of sagging consumer confidence and a cloudier economic outlook.

The annual sales rate slipped to 11.08 million vehicles in June, down from 11.6 million in May and below the 11.15 million averages of the first half, according to industry tracking firm Autodata. The lower US sales come as weaker sales in France and the prospect of higher taxes in markets like Spain deepened concern about a double-dip recession worldwide.

For U.S. auto sales, General Motors Co. sold 194,716 units in June, up 11% from year ago. Ford Motor Co. sold 175,960 units, up 13%, Chrysler Group LLC sold 92,482 units, up 35%, Honda Motor Co. sold 106,627 units, up 6%, Toyota Motor Corp. sold 140,604 units, up about 7%, Volkswagen AG sold 21, 051 units, up 11% and Daimler AG sold 19,574 units, up 20% in Mercedes-Benz and Smart sales.

Generally, auto sales in U.S. in June compared to May, for all the companies saw declines of 5% to 23%.

Sales in June were hurt by recent dips in consumer confidence as well as lower sales to commercial fleet buyers such as rental-car companies, which are paring back purchases after restocking their fleets earlier in the year.

(Irco.biz)


Spot rubber rules steady

Kottayam, July 12

Spot rubber prices continued to rule unchanged on Monday. The market lost its direction lacking active participants as the domestic futures showed signs of weakness on early trades.

A late recovery on the NMCE failed to make any visible change in prices and sheet rubber closed at Rs 185 consecutively for the third day amidst comparatively dull volumes.

Futures improve

The July futures on National Multi Commodity Exchange increased to Rs 190.30 (187.52), August to Rs 181.70 (179.26), September to Rs 173.88 (172.32) and October to Rs 167.90 (166.73) a kg for RSS 4. RSS 3 declined with the July futures slkipping to ¥350.8\Rs 185.05 (¥355), August to ¥310 (¥317.1), September to ¥298.5 (¥305.8), October to ¥280.7 (¥288.1), November to ¥269.7 (¥277.9) and December to ¥265.5 (¥273) a kg during the day session on the Tokyo Commodity Exchange (TOCOM). RSS 3 (spot) slipped to Rs 162.59 (163.36) a kg at Bangkok.

Spot rates were (Rs/kg): RSS-4: 185 (185); RSS-5: 180 (180); ungraded: 175 (175); ISNR 20: 162 (162) and latex 60 per cent: 128 (128).


Meet to discuss impact of climate change on rubber production
Our Bureau

Kochi July 12

The Rubber Research Institute of India (RRII) and the International Rubber Research and Development Board (IRRDB) are jointly organising an international workshop on “Climate change and natural rubber cultivation: Research and Development Priorities” at the RRII, Kottayam.

The IRRDB is an international organisation for natural rubber research, headquartered in Kuala Lumpur.

The international workshop, which is scheduled during July 28-30, will be inaugurated by Mr Sajen Peter, Chairman of the Rubber Board. Dr Abdul Aziz Kadir, Secretary-General, IRRDB; Dr Stephen Evans, Secretary-General, International Rubber Study Group (IRSG); Prof J. Sreenivasan, Chairman, Divecha Centre for Climate Change; Dr James Jacob, Rubber Research Institute of India (RRII); and representatives from Malaysia, Indonesia Thailand, Sri Lanka, Myanmar, China, Cambodia and India are expected to participate in the workshop.

Experts from the areas of physiology, agronomy, molecular biology, breeding, pathology, climatology and extension would also attend the workshop. The workshop is being conceived with the objectives to review how far climate has changed in the major natural rubber producing countries of the world. It would also examine how far climate change has impacted the growth and productivity of rubber, to assess the future climate scenarios in natural rubber-growing countries and to evolve research strategies for rubber cultivation in stressful environments.

About 30 papers on various subjects are to be presented at the workshop.