Rubber Prices May Extend Drop on Vietnam-China Trade Resumption

Mixed trend in rubber
Aravindan

Kottayam, July 14

Spot rubber prices witnessed a mixed mood on Wednesday. A difference of around Rs 30 with the Bangkok spot market put the prices under pressure during the day. But sheet rubber managed to close unchanged at Rs 185 a kg as there were no quantity sellers on the grade while RSS 5 and ungraded rubber slipped amidst scattered transactions.

Futures firm

Rubber futures were firm on the National Multi Commodity Exchange. Highly traded August series witnessed a high of Rs 18,075 and a low of Rs 17,826 a quintal. The total volume was 5730 lots and turnover 102.58 crores. The total open interest was 5273. The July series improved to Rs 192.70 (189.05), August to Rs 180.70 (179.18) and September to Rs 171.78 (171.17) while the October series finished flat at Rs 166.51 (166.51) a kg for RSS 4. RSS 3 weakened at its July futures to ¥343\Rs 181.03 (¥344.4), August to ¥296.8 (¥302.7), September to ¥284.8 (¥290.8), and October to ¥270.2 (¥274.4) while the November futures improved to ¥265.7 (¥263.6) and December to ¥264.2 (¥260.1) a kg during the day session on the Tokyo Commodity Exchange. RSS 3 (spot) declined sharply to Rs 155.27 (159.37) a kg at Bangkok.Spot rates were (Rs/kg): RSS-4: 185 (185); RSS-5: 179.50 (180); ungraded: 174.50 (175); ISNR 20: 162 (162) and latex 60%: 128 (128).




Rubber Prices May Extend Drop on Vietnam-China Trade Resumption
Posted: 14 Jul 2010 12:34 AM PDT
By Bloomberg News

July 14 (Bloomberg) -- Natural rubber futures in Tokyo and Shanghai may extend recent declines if Vietnam, the fifth- biggest producer, resumes full border trade with China after it was halted last month to combat smuggling, analysts said.

Anti-smuggling efforts by the Chinese and Vietnamese governments have cut off supplies for several weeks, Li Shiqiang, general manager at Sri Trang (Shanghai) Ltd., a unit of Thailand’s largest publicly traded rubber exporter, said in a phone interview.

“For the past few months, the border gates to China have been sometimes open, sometimes closed. Prices were unstable, causing a lot of difficulty for Vietnam’s rubber companies,” Dinh Thi Thanh Tam, deputy director at Hoa Thuan Co., a natural rubber producer and exporter, said from Ho Chi Minh City.

A rise in supply from Vietnam may increase pressure on prices amid concern that demand is weakening as auto sales in China slow and uncertainty lingers about the strength of the global economic recovery, Guo Cheng, analyst at Yongan Futures Co., said by phone from Beijing.

Tokyo rubber tumbled to the lowest in more than a month yesterday, dropping 2 percent to 260.1 yen a kilogram ($2,923 a metric ton) on concern that demand may be slowing as supplies increase from Thailand, the world’s biggest producer. The most- active contract in Shanghai declined 2 percent to 20,985 yuan ($3,099) a ton.

December-delivery rubber climbed 1.7 percent to 264.5 yen a kilo at 9:58 a.m. in Tokyo. The price more than doubled last year as China’s auto sales surged to 13.6 million, supplanting the U.S. as the biggest vehicle market.

Border Gates

“We have heard that some tire makers have secured some natural rubber shipments from Vietnam lately, a sign that supply is to resume from that country,” Guo said. Vietnam exports about half a million tons of natural rubber a year, almost all of it to China, he said.

Chinese businesses typically prefer border trade over official trade because it has a lower import tax and doesn’t require quality control certificates, said Tran Thi Thuy Hoa, Secretary-General of the Vietnam Rubber Association.

Rubber exports to China have the potential to expand this month as supplies from Vietnam increase and businesses in China “still have demand,” Ho Chi Minh City-based Hoa said in a phone interview. “The association has suggested rubber exporters improve quality so they can export via official trade, instead of border trade, and be less dependent on China’s policy,” she said, referring to border closures.

Car Sales

“The cheap price of Vietnam rubber and its proximity to China always make it popular among Chinese buyers, so a resumption of trade will definitely increase supply into China,” Yongan Futures’ Guo said yesterday.

The interrupted border trade has helped create a backwardation, where cash prices are more expensive than contracts for delivery in future months, typically indicating an immediate supply shortage, Li said.

Still, China’s passenger-car sales to dealerships grew at the slowest pace in 15 months in June as inflation reduced purchasing power and economic growth showed signs of cooling, pressuring rubber prices.

Sales of cars, sport-utility vehicles and multipurpose vehicles in the world’s largest auto market rose 19 percent from a year earlier to 1.04 million last month, the China Association of Automobile Manufacturers said on July 9. It was the smallest increase since March 2009.

“Slower growth in auto sales has affected the tire makers,” Li said. “The Chinese tire makers are not aggressive buyers these days; they are only buying raw materials hand-to- mouth because their end-product inventory is quite high.”

Damped Sentiment

China is not short of natural rubber at the moment as the country imported 120,000 metric tons in June, a gain of 33 percent from a year ago, the customs bureau said on July 10. Rubber inventories increased 3,429 tons to 19,411 tons, based on a survey of 10 warehouses, the Shanghai Futures Exchange said on July 9.

“Improved supply in southern Thailand amid an absence of orders from China also damped market sentiment,” said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co. An average of 300 tons a day of ribbed smoked sheets is bring traded in Thailand’s southern province markets this month, compared with about 100 tons a day last month, Chaiwat said.

Vietnam is the world’s fifth-biggest rubber producer, after Thailand, Indonesia, Malaysia and India. The country may produce 770,000 million tons this year, up from 723,700 tons last year, according to the Association of Natural Rubber Producing Countries in its June newsletter.

(bloomberg.com)





Rubber Recovers From One-Month Low as Equities Rally, Yen Drops
Posted: 14 Jul 2010 12:33 AM PDT
By Aya Takada

July 14 (Bloomberg) -- Rubber recovered from a one-month low as a rally in global stocks boosted investor confidence in the economic recovery and a weaker Japanese currency raised the appeal of yen-based contracts.

Futures in Tokyo gained as much as 2.9 percent after reaching the lowest level since June 9. The price advanced for the first time in four days.

Asian stocks rose, pushing the region’s benchmark index to a three-week high, after Intel Corp. reported record second- quarter sales and Singapore raised its 2010 economic growth forecast. The yen declined against the dollar on signs of growth in U.S. companies.

“Market sentiment improved as stocks rallied on good corporate earnings,” boosting investor appetite for riskier assets, Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone.

December-delivery rubber gained as much as 7.5 yen to 267.6 yen per kilogram ($3,009 a metric ton) before trading at 263.3 yen on the Tokyo Commodity Exchange at 12:04 p.m.

The MSCI Asia-Pacific Index gained 1.5 percent to 117.81 as of 11:14 a.m. in Tokyo, reaching the highest level since June 22. Singapore said its economy will grow between 13 percent and 15 percent this year, adding to confidence in the economic recovery after Greece sold bonds at a rate below what the country pays for European aid.

Gains Limited

Gains in rubber futures were limited amid concern that demand in China, the world’s largest consumer, may weaken after car sales growth slowed, Sugata said.

November-delivery rubber on the Shanghai Futures Exchange fell as much as 1 percent to 20,985 yuan ($3,098) a ton before trading at 21,290 yuan at 11:08 a.m. local time.

The price may extend declines if Vietnam, the fifth-biggest producer, resumes full border trade with China after a halt last month to combat smuggling, analysts said.

Anti-smuggling efforts by the Chinese and Vietnamese governments have cut off supplies for several weeks, Li Shiqiang, general manager at Sri Trang (Shanghai) Ltd., a unit of Thailand’s largest publicly traded rubber exporter, said in a phone interview.

“For the past few months, the border gates to China have been sometimes open, sometimes closed. Prices were unstable, causing a lot of difficulty for Vietnam’s rubber companies,” Dinh Thi Thanh Tam, deputy director at Hoa Thuan Co., a natural rubber producer and exporter, said from Ho Chi Minh City.

Sales of cars, sport-utility vehicles and multipurpose vehicles in China, the largest auto market, grew 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 increased.

(bloomberg.com)





Asian Stocks, Currencies Climb on Intel Sales, Singapore Growth
Posted: 14 Jul 2010 12:32 AM PDT
By Lisa Pham and Frances Yoon

July 14 (Bloomberg) -- Asian stocks rose to a three-week high, and emerging-market currencies climbed after Intel Corp. reported record second-quarter sales and Singapore raised its 2010 economic growth forecast.

The MSCI Asia-Pacific Index gained 1.3 percent to 117.50 as of 4 p.m. in Tokyo, reaching the highest level since June 22. The Stoxx Europe 600 advanced 0.2 percent to 256.60. Futures for the Standard & Poor’s 500 Index increased 0.6 percent. The Korean won strengthened 0.8 percent to 1,202.33 per dollar, snapping a two-day drop. Rubber futures in Tokyo climbed as much as 2.9 percent on speculation that demand may increase.

Singapore said its economy will grow between 13 percent and 15 percent this year, adding to optimism in the world’s recovery after Greece sold bonds at a rate below what the country pays for European aid. Intel, the world’s biggest chipmaker, said third-quarter sales will be $11.6 billion, exceeding analyst estimates of $10.9 billion in a Bloomberg survey.

“The positive outlook for earnings is easing investors’ perception of risk,” said Tomomi Yamashita, a fund manager in Tokyo at Shinkin Asset Management Co., which oversees about $6 billion. “Economic growth needs to become sustainable. We are looking for strong economic data from the U.S.”

Advancing stocks beat decliners by 8 to 1 in the MSCI Asia Pacific Index and a gauge of technology stocks rallied 2.2 percent, the most among 10 industry groups. Japan’s Nikkei 225 Stock Average surged 2.7 percent, the biggest gainer among major indexes. South Korea’s Kospi jumped 1.3 percent.

Komatsu Forecast

Komatsu Ltd., the world’s second-largest maker of construction equipment, rallied 5.4 percent after raising its first-half net income forecast by 41 percent to 52 billion yen on rising demand from Asia and Latin America.

Samsung Electronics Co., Asia’s biggest semiconductor maker, and Hynix Semiconductor Inc. both gained more than 3.4 percent. Advantest Corp., the world’s largest maker of chip-testing equipment, leapt 5.7 percent. Intel shares climbed 7 percent in extended trading after the New York close yesterday.

“It’s hugely significant that Intel, which represents high-tech companies, should report stronger than estimated results,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc.

Profits for S&P 500 companies probably increased 34 percent in the April-June period, according to analysts’ estimates compiled by Bloomberg. Sales at U.S. retailers fell 0.3 percent in June following a 1.2 percent drop in May, according to the median estimate of 75 economists.

BHP, Rio

Commodity companies rose after the London Metal Exchange Index of six metals gained 1.1 percent yesterday, while crude oil futures jumped 2.9 percent. BHP Billiton Ltd., the world’s largest mining company and Australia’s largest oil producer, increased 2.1 percent in Sydney, while Rio Tinto Group, the world’s third-biggest mining company advanced 1.3 percent.

Oil fell from a two-week high in New York, dropping 0.1 percent to $77.07 a barrel, as investors sold contracts to lock in gains after an industry report showed U.S. crude inventories gained. Oil surged 7.2 percent from July 6 through yesterday on signs the global economic expansion will spur fuel demand following reports of second-quarter profits at U.S. companies. U.S. crude, distillate and gasoline stockpiles gained last week, the American Petroleum Institute said yesterday. The Energy Department will release its inventory report today.

“The market has gone up the past few days. It may be overbought so some short-term profit taking has come into the market and that will cap prices,” said Tetsu Emori, a commodity fund manager at Astmax Ltd. “If the DOE numbers follow the API, that will be a very bearish factor.”

Bond Risk

The cost of protecting Asia bonds from default fell to the lowest level in more than three weeks, according to traders of credit-default swaps. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 2 basis points to 122.5 basis points, according to ICAP Plc. That’s the lowest since June 21, according to CMA.

The yen weakened 0.1 percent to 112.99 per euro and the euro was little changed near a two-month high at $1.2701. The pound rallied to $1.5243, the highest since May 4, before trading at $1.5191. The Greek government sold 1.625 billion euros ($2.05 billion) of 26-week Treasury bills at a yield of 4.65 percent.

Bonds fell with the yield on Australian 10-year debt climbing five basis points to 5.16 percent and that on Indian notes rising two basis points to 7.64 percent. Treasury yields were at 3.12 percent, the highest level in two weeks before an auction of $13 billion of 30-year bonds today, the last of three sales this week totaling $69 billion.

“Robust profit reports reinforce risk sentiment, which was battered recently by concerns for a global recovery,” said Masahide Tanaka, a senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second-largest bank. “Revived risk sentiment will trigger a shift of allocation back into higher-yielding assets away from safer assets such as the yen.”

(bloomberg.com)





Summer Rubber: Testing performance tires from Hankook and Kumho
Posted: 14 Jul 2010 12:31 AM PDT
With summer in full swing, you've probably already been to an autocross or an open track day this year. And you're either glad you picked up that new set of tires--or really bummed that you didn't. As any performance driver will tell you, tires are the single most important factor in determining how well or how poorly a car performs.

So if you're a racer who attempted to squeeze another season out of some tired rubber with disappointing results, you can still spring for new tires now and salvage the second half of the year.

Over the past few months, we were invited to sample some performance tire offerings from Hankook and Kumho and came away contemplating making one of them the next tire we put on our own weekend racer.

Hankook Ventus V12 evo

Hankook has been making plenty of headway in the tire industry winning OE supplier contracts with the likes of Ford, GM, Hyundai, Kia, Volkswagen and Chrysler, but it's also been active in the performance and motorsports arenas. In the past, it's participated in the American Le Mans Series and continues to support drifting with its Ventus family of tires.

We tested the Hankook Ventus V12 evo against the Bridgestone Potenza RE760 Sport on a dry autocross course with a lane change section, slalom, 180-degree turn and fast sweeping right- and left-handers on identical Mustang GTs. Through all the exercises, the Hankooks were more predictable, responded faster to steering inputs and offered more grip through the fast portions of the course. The Bridgestones still offered respectable performance, but compared to the Hankooks, they understeered more and weren't as quick to change direction.

Hankook's explanation for its superior performance comes down to a number of things. Engineers first credited the V12 evo's 3D tread block edges and continuous center rib which provides optimal ground contact pressure to improve response and brake performance. Much credit also went to the evo's construction, which utilizes twin steel belts reinforced with two-ply nylon and a lower side wall made from hard rubber with steel reinforcement (Bridgestone only uses hard rubber for its lower side wall).

We didn't get a chance to test the V12 evo's wet weather performance, but Hankook says the tread's wide linear grooves and Y-shaped pattern make it efficiently channel water away from the tire for good wet weather performance.

On top of all that, Hankook representatives say that the Ventus V12 evo retails on average between 15 to 20 percent cheaper than the Bridgestone, which makes it a mighty enticing tire for both its performance and value.

Kumho Ecsta XS

Another high-performance Korean tire that we strongly suggest checking out is Kumho's Ecsta XS, which launched last fall to replace the aging Ecsta MX. Changes to the XS include an asymmetric tread design, flatter center tread design for a maximum footprint and an ultra fine carbon black tread compound for improved traction and better heat management. Additional features include a solid center tread rib for better steering response and rim protector bars on all size tires.

We spent a day wringing out the XS at Mid-Ohio Sports Car Course on an autocross and hot lapping the 2.4-mile road course. We also got the chance to sample the older MX to compare the new against the old. On the autocross, we drove Acura TSXs and Honda S2000s and could easily pick up the differences. The XS offered much more grip in the corners with better response at turn-in. After only a few loops around the course, we were pushing it really hard. The XS did not disappoint and were noticeably quieter giving off less tire squeal when pushed to the limit compared to the MX. In the S2000, we ended up being 0.8-seconds faster around the short autocross on the XS than on the MX.

For the hot laps, we really put the improved heat management of the tread compound to the test. In addition to the heavy flogging, the tires had to deal with hot outside temps. After roughly 10 laps of the road course, the tires showed no signs of going away and stayed consistently good the entire time. The stellar performance allowed us to build a good amount of confidence behind the wheel at a track we had never been on prior and do surprisingly well.

One of the tires Kumho cited as a main competitor is the Falken Azenis RT-615, which happen to be the tires on this writer's personal 1994 Mazda RX-7. We were so impressed with the Ecsta XS that they probably will be replacing our Falkens soon. Count us as a conquest sale.

(autoweek.com)





Natural Rubber Output Soars By 19.7 Per Cent In May
Posted: 14 Jul 2010 12:24 AM PDT
KUALA LUMPUR, July 14 (Bernama) -- Malaysia's natural rubber output rose to 65,254 tonnes in May this year, an increase of 19.7 per cent or 10,724 tonnes from the previous month's production.

Year-on-year, the production increased 9.2 per cent or by 5,521 tonnes, while exports increased 35.6 per cent for the month, the Department of Statistics said.

However, the export of natural rubber in May this year decreased by 6.2 per cent to 64,232 tonnes when compared with exports in the month of April.

The level of stocks also decreased by 17,782 tonnes to 120,731 tonnes in May when compared with the previous month, but year-on-year the stocks rose by 13.9 per cent.

Imports in May meanwhile was down by 15.7 per cent when compared with the corresponding period of last year. The imports were however marginally up by 0.8 per cent at 49,734 tonnes when compared with imports in April this year.

(bernama.com)





Slower Growth in NR Supply
Posted: 14 Jul 2010 12:23 AM PDT
By Anant Thawatchaipracha

12 July 2010 – The ANRPC lowered its forecast of growth for global supply of natural rubber for 2010 to 5.2% from the 6.1% rate anticipated in May, according to its June monthly bulletin released recently.

The ANRPC had earlier in March anticipated a 6.3% rate of growth and had even then cautioned it to be an optimistic rate and pointed out a host of constraints in its achievement.

Two of the major constraints, it said, were that existing yielding rubber trees in major producing countries were largely planted during 1980’s and they have now reached senile stage having low yield. Secondly, the anticipated rate assumed a favourable climate during the whole year.

It further said that the revised 5.2% rate is subject to further downward revisions in view of constraints related to farmers delaying replanting because of the high rubber prices, the age-structure of rubber threes causing lower yield outputs, effect of unusual rains on Indonesia’s output in June, effect of an extended wintering on Thailand’s production and a revised lower forecast for India’s output.

(irco.biz)