My Predictions

1)I had predicted 4 monthe before to all of my regular buyers that after 15th Aug,2010,rubber prices will start falling down. The results are in front of you,prices nosedives.In November 2009(when ruling rubber prices were only 85 to 90), I made predictions that rubber will cross 150 before monsoon, 190 during monsoon,that also came right.



2)Spot rubber nosedives

Kottayam, Aug. 20

Spot rubber nosedived on Friday. The market continued its downward journey reacting to the decision of the Ministry of Commerce to reduce the import duty of natural rubber from 20 per cent to 7.5 per cent. RSS-4 declined sharply to Rs 171 from Rs 180 a kg in the main marketing centres.

According to observers, there has been visible selling pressure from dealers. The board's rate moved down to Rs 174 from Rs 180 a kg for sheet rubber.

The market may remain subdued during the weekend session on Saturday prior to the Onam holidays. The September futures moved down to Rs 167.31 (172.38), October to Rs 163.50 (166.25), November to Rs 162.78 (165.64) and December to Rs 164.25 (166.54) a kg for RSS 4 on the National Multi Commodity Exchange.

The volumes stood at 6,462 lots. RSS-3 weakened at its August futures to ¥332.0/Rs 181.65 (¥334.3) a kg during the day session and closed unchanged during the night session on the Tokyo Commodity Exchange.

The grade (spot) improved to Rs 156.19 (155.67) a kg at Bangkok. Physical rubber rates per kg were: RSS-4 Rs 171(180); RSS-5 Rs 162 (170); Ungraded Rs 156 (160); ISNR 20 Rs 150 (154) and Latex 60% Rs 111 (114).





3)Panel wants Customs duty cut on rubber imports
Suggests duty of Rs 20.46/kg or 20 per cent.
The ultimate objective of fixing the cap would be to harmonise the domestic rubber prices with international prices.



Kochi, Aug. 20

The Government-appointed panel to look into the problems of the rubber industry has recommended that the Customs duty on natural rubber imports be brought down to either Rs 20.46 for a kg or 20 per cent, whichever is lower. This comes as a major relief to the consuming industry which has seen a widening divide between the Indian and international price of natural rubber.

The duty of Rs 20.46 for a kg was arrived at by calculating the last three-year average price of natural rubber in Indian markets, which worked out to Rs 102.32 for a kg. As the price of natural rubber soared in the Indian and international markets, the industry was constrained to pay as much as Rs 30-32 for a kg. As the Customs duty continued to remain at 20 per cent, it had hampered imports which resulted in differentials between Indian and international prices widening to as much as Rs 30 for a kg.

The cap on non-ad valorem duty shall be subjected to annual revision based on the trends in natural rubber prices, production, consumption and external trade in rubber and in rubber products, the panel has recommended. The ultimate objective of fixing the cap would be to harmonise the domestic rubber prices with international prices and would be fixed only if the average price in the domestic market remained higher than that of comparable grade in the international market.

Prices

The panel was of the opinion that minimum and maximum price for natural rubber shall not be notified except in an emergency situation as they cannot be enforced without infringing upon the commitments of the Government of India under the WTO agreement. The demand for banning futures trade in rubber also did not find favour. But it was thought prudent that the Forwards Markets Commission be directed to re-examine the Daily Cap. On the question whether the rubber cess should come under Cenvat, the panel left the final decision to the Union Ministry of Finance.

The panel which was headed by the Rubber Board Chairman, Mr Sajen Peter, and had expert members as well as a nominee from the Forward Market Commission, was concerned about the rubber consuming units in the country. However, the market for natural rubber had a handful of major tyre manufacturing units dominating the purchase side and numerous marginal/small farmers on the supply side.

Withheld stocks

While powerful sections of the consuming industry had been reportedly influencing rubber prices earlier, the current complaints have been that the producers and traders have been withholding stock to jack up prices. It was in this background that the panel felt that some sort of tariff concessions should be accorded to the rubber consuming industry at least on an ad hoc basis. This, it was believed, would lead to greater harmonisation and integration of domestic and international prices of natural rubber.

The integration of rubber market with the world market which culminated in the lifting of quantitative restrictions in April 2001, led to the harmonisation of the Indian and international prices of rubber.

During the 1980s, domestic prices on an average were about 50 per cent higher than international rubber prices. However, the higher domestic rubber prices could be absorbed by the Indian industry by virtue of the domestic market orientation and protection from external competition.

This changed dramatically by 1990s when domestic prices ruled just 6.5 per cent above global prices. Even that trend was reversed during the current decade when domestic prices were lower by 2.8 per cent from global prices. The panel felt that the time had come bring non-advalorem duty as the protection extended to the domestic rubber manufacturing industry has been substantially eroded and the sector has to face intense competition especially from Chinese manufacturers.



4)Natural rubber prices fall in anticipation of lower duty
Posted: 19 Aug 2010 08:26 PM PDT
Natural rubber prices plummeted in the local market today, following the commerce ministry decision to reduce import duty on NR to 7.5 per cent from 20 per cent.

The price of the benchmark grade, RSS 4, fell to Rs 180 a kg from Rs 184 on Wednesday. The ministry had proposed to reduce the duty as the country was facing serious shortage resulting in the price rise.

The rubber-based industry, especially tyre manufacturers had been asking the ministry to reduce duty. Even after the dip in prices, the Indian market is higher by Rs 25 a kg to global market rates. The Bangkok market today quoted Rs 155.

The decision, however, still awaits a formal announcement from the ministry of Finance and Cabinet approval. The rubber-based industry has been pressing this demand for some time now, with the surging prices during the last 5-6 months. Though the Rubber Board data ensures a stock of more than 200,000 tonnes, the local market is experiencing serious shortage.

From June onwards, local prices were higher than the global market and import might have been a temporary solution. But the exorbitantly high duty was the main hurdle to import rubber.

Refuting the board’s data, Automotive Tyre Manufacturers Association (Atma) said the local stock would not be more than 100,000 tonnes. A recent direction of the Delhi High court to ensure supply of rubber in the country, had also prompted the government to ensure supply through the import route.

The various organisations of the industry, including Atma, had demanded that the duty be reduced to 7.5 per cent as import duty on rubber-based finished products, including tyre, was 10 per cent.

However, the 11-lakh rubber growers in Kerala – 92 per cent of rubber is produced in the state – are waiting to see whether the Cabinet approves the reduction in duty as local prices could drop as a consequence.

MPs from the state, cutting across party lines, have protested the decision as the local body elections are approaching. But, this time, they feel that there will be a reduction in duty.

George John, a farmer from Ernakulam district said the decision of the commerce ministry is unfair as farmers are getting the ‘high’ prices only for the last three-four months. The average price in 2009 was Rs 97. “After long periods of suffering and hardship we are getting a good price and the government is damaging the prospects even of this temporary advantage by favouring the industry.”

P V Ajith, a Thiruvananthapuram farmer told Business Standard that the government should also consider the concerns of the farmers. He said that the price hike is only a ‘temporary bonus’ to the growers.

In India, consumption is increasing at a much faster pace – with growing demands for rubber based goods, especially tyres – than production, hence the demand-supply gap is widening in recent years. Industry associations are of the view that import is the effective way to meet the increasing demand.

The government’s decision will also pave the way for a political battle, as the state is now gearing up for local body elections. A section of the media, with affinity to the Left had already kicked off a debate on the issue. Athough the decision is economic, the political repercussions would be deeper and wider.

(business-standard.com)



5)State opposes cut in rubber import duty

SPECIAL CORRESPONDENT

The State government will communicate its protest against the reduction of import duty on rubber to the Centre, Finance Minister T.M. Thomas Isaac has said.

The Minister told a press conference here on Friday that the Central government had ignored the recommendation of its own committee in reducing the import duty to 7.5 per cent. The committee, appointed by the Centre to review the import policy and headed by the chairman of the Rubber Board, had suggested a duty of 20 per cent ad valorem. If the duty based on prevailing price was not available, importers had the choice of opting for a duty rate of Rs.20.46 a kg.

Under the Association of South-East Asian Nations (ASEAN) trade agreement, India could impose duty of up to 25 per cent on rubber. However, the Centre had now chosen to bring it down to 7.5 per cent which would gravely affect the farmers of the State. Kerala should raise strong protest against that, he said.

The Minister said the domestic prices for rubber, which ruled at Rs.185 a kg, had dropped following the announcement of the reduction in duty. Current international prices of rubber ranged from Rs.150 a kg to Rs.155 a kg. So, it would be possible to import rubber at prices lower than in the domestic market. It was to be noted in this regard that domestic prices used to be 50 per cent higher than the international prices before the signing of the ASEAN agreement. The Centre was bringing down the duty rates under pressure from importers and exporters in other countries.(THE HINDU)



Natural rubber imports rise sharply on duty cut
Source: Business Times Dial | Last Updated 10:11 (29/07/10)

Tire industry in the past month from rising demand for natural rubber prices in the domestic market has appreciated by 7.6 per cent is. Kottayam in Kerala on Wednesday -5 RSS and RSS-4 price increase respectively were 178 and 183 kg. Natural rubber prices in the futures market has risen 6.8 per cent. During the Singapore Commodity Exchange (Sicoma) in natural rubber prices declined 12.3 percent. Imports are expected to rise in coming days because the current is increasingly likely to stay.

Rubber Merchants Association Secretary Ashok Khurana said the tire industry demand for natural rubber prices rising trend remains up. RSS RSS -4 -5 and prices in Kottayam on June 28 were 168 and 170 kg, which increased on Wednesday respectively were 178 and 183 kg. Natural rubber prices in the far abroad were strong, making imports was reduced. But in the past month, prices in foreign markets has fallen nearly 12.3 percent. Singapore Commodity Exchange (Sicoma) Natural rubber prices in the Rs 169-170 per kg on June 28 (Indian currency) was reduced to 148-149 kg, which left on Wednesday. Overseas markets than in India, nearly 34 kg less than its price in the coming days why imports are expected to rise. Natural rubber in the domestic market's current boom could take breaks.

According to the Indian Rubber Board in June 9255 tonnes of natural rubber imports is already 20 250 tonnes imported last year was in June. In June, domestic natural rubber production has increased by five per cent. Domestic production increased during this period was 57,000 tonnes in the same month last year while only 54 255 tonnes was produced. Consumption has also increased during this period. Natural rubber consumption in June of the current year was 75,000 tons in the same month last year while the consumption was 74 220 tonnes.

National Multi Commodity Exchange (NMCE), the August futures contract for natural rubber prices close 6.8 per cent in the past month has come fast. Investors purchase futures contracts in August to rise in prices of natural rubber kg were increased to 187 on Wednesday. In August, the futures contract on June 28 the price was 175 kg. Herisns Malayalam Ltd Managing Director Pankaj Kapur, said to be less consumed than natural rubber production is the sharp increase in prices. In fiscal 2010-11 Natural rubber consumption in the country is estimated at Rs 9.78 lakh tonnes. During this period, while production is estimated to be 8.93 million tonnes.

Of sense in the futures market futures 6.8 per cent in August Natural kg in a month has risen to 187. But rising imports coming forward spot in the softening effect might seem.(Dainik Bhaskar)