Rubber Futures Jump as China's Physical Demand, Weaker Yen Boost Appeal

Spot rubber prices improve
Aravindan

Kottayam, Aug 26

Spot rubber improved on Thursday. According to sources, prices ruled firm following the news that the Union Minister for Commerce and Industry, Mr Anand Sharma, has ruled out any cut in import duty of rubber from 20 per cent. The sentiments were also catalysed by the bullish international indices. In spot, sheet rubber increased further to Rs 174 from Rs 173.5 a kg on fresh buying and short covering.

The trend was mixed as ISNR 20 and latex 60 per cent finished flat amidst dull volumes. The Board's rate was firm at Rs 174 (173) a kg for RSS 4.

Futures gain

In futures, the September series for RSS 4 moved up to Rs 173.5 (173.05), October to Rs 168.1 (166.73), November to Rs 166.1 (165.34) and December to Rs 166 (165.72) a kg on the National Multi Commodity Exchange. RSS 3 flared up at its September futures to ¥314.3/Rs 174.22 (¥304.5) during the day session and to ¥316 (Rs 175.27) a kg during the night session on the Tokyo Commodity Exchange. The grade (spot) improved to Rs 157.64 (155.92) a kg at Bangkok.

Spot rates were (Rs/kg): RSS-4: 175 (173.5); RSS-5: 165 (164); ungraded: 162.50(158); ISNR 20: 151 (151) and latex 60 per cent: 112 (112).

Rubber Futures Jump as China's Physical Demand, Weaker Yen Boost Appeal
Posted: 26 Aug 2010 12:54 AM PDT
Rubber climbed for the first time in five days as buying demand from China, a weaker Japanese currency and crude oil gains enhanced the appeal of the commodity used to make tires.

Rubber futures surged as much as 2.8 percent after retreating to one-week low yesterday. The January-delivery contract gained as much as 7.9 yen to 294.2 yen per kilogram ($3,475 a metric ton) on the Tokyo Commodity Exchange, before trading at 293.7 yen at 11:17 a.m.

“Physical buying coming from China gives the strength to the market,” Felix Yeo, trading manager at the Singapore unit of Marubeni Corp., said by phone today. Rising oil prices and a weakening yen also provide the support, he said.

The Japanese currency weakened for a second day against the dollar and the euro amid speculation policy makers will take measures to curb an advance. The yen fell to 84.89 per dollar in Asia, from 84.58 in New York yesterday.

Crude oil rose for a second day as U.S. equities climbed yesterday after a report that sales of new homes dropped in July to the lowest level on record. Rising oil prices improve rubber’s competitiveness against its synthetic rival.

China’s natural rubber inventories expanded for a fourth week, growing by 2,858 tons to 24,733 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said Aug. 20.

The country is expected to import 135,000 tons of natural rubber in August and another 130,000 tons in September, the Association of Natural Rubber Producing Countries said in its newsletter this month. China’s gross imports this year may rise 5 percent to 1.67 million tons, the association said.

Rains Disrupt

“Thailand and Malaysia have been affected by some rains, raising supply concern,” Yeo said from Singapore. Rainfall disrupts tapping, lowering rubber output.

Heavy rainfall is likely across Thailand until the end of August, the Thai Meteorological Department said on its website.

In the cash market, Thai rubber prices fell 0.7 percent to 104.8 baht ($3.33) per kilogram yesterday, the Rubber Research Institute of Thailand said on its website. Supply availability remains limited because of persistent rainfall in rubber plantation areas, it said yesterday.

January-delivery rubber on the Shanghai Futures Exchange advanced 1.6 percent to 25,235 yuan ($3,710) a ton.

(bloomberg.com)





China's NR Imports in July
Posted: 26 Aug 2010 12:52 AM PDT
By Siwaporn Bumroongpan

China’s NR imports in July grew 28% from 115,752 tons in June to 147,902 tons, according to the General Administration of Customs.

The July import, however, was 11% less compared with the same month last year. For the January-July period, China imported 983,996 tons of NR, down 1% compared with the same period last year.

(Irco.biz)





Govt to retain duty on imports - Rubber Board
Posted: 26 Aug 2010 12:50 AM PDT
MUMBAI (Reuters) – The government will not cut import duty on natural rubber imports, Trade Minister Anand Sharma told to a group of ministers from Kerala in a meeting on Wednesday, Rubber Board chairman Sajen Peter, said in a statement.

Kerala is the biggest rubber-producing state in the country.

Peter, who attended the meeting, said the minister has assured the delegation that the twenty percent import duty would stay and if the government decides to cut the duty it will implement the recommendations of expert panel constituted under the directive of Delhi High Court.

The panel had recommended that the import duty be retained at 20 per cent, but a maximum ceiling of 20.46 rupees be fixed, which is based on the average domestic price of rubber for the last three fiscals.

Rubber consumers have been demanding lower tax on imports after domestic prices jumped on robust demand from tyre industry and the gap between local and international prices widened.

(in.reuters.com)


Entrepreneurs welcome cut in rubber import duty


High rubber price was affecting small, medium industries, say dealers
KOCHI: Rubber farmers might see red over the cut in import duty of rubber, but entrepreneurs in the small and medium sectors are happy with the development.

A respite from unbridled price rise has meant a lot to the manufacturers of rubber-based products.

There are about 100 rubber-based small-scale manufacturing units which are struggling for survival, says G. Krishnakumar, who heads such a unit, based in Palakkad.

The manufacturers are under pressure to increase the prices of the products because of the rising cost of raw materials.

But they cannot do so as the same range of products, imported from China, is available in the market at a cheaper rate. An increase in the price of the local products will lead to foreign products occupying the market, pushing the indigenous industry to peril.

A reasonable price for rubber is essential for the Kerala economy, but it is inappropriate to say that the prices should remain high, says P.M. Mathew, Director of Institute of Small Enterprises and Development. Increase in rubber prices will benefit the farmers, but it can harm entrepreneurship.

Those who lament the State's slow industrial progress should study the situation closely, he says.

To Tamil Nadu, Punjab

Only 2 or 3 per cent of the rubber produced in the State is being utilised by the small-scale manufacturers. Several of them get the products made elsewhere, so as to take advantage of the lower tax rate there.

There are rubber-based product manufacturing units in Ambattur in Tamil Nadu and Jalandhar in Punjab. Many barrels of latex are being transported to those places from Kerala, he points out.

Several private companies and cooperatives process raw rubber in the State, but they do not manufacture rubber-based products. Political lobbies support the cooperatives, but the small scale manufacturer's struggle for survival is neglected.

Tyre manufacturers and non-tyre manufacturing industry consume rubber almost equally. The non-tyre manufacturing units are situated mostly in North Indian States. While Kerala makes over 90 per cent of the rubber, its consumption is too low. The ground for setting up rubber-based industrial units should be prepared by ensuring a balanced price for rubber, he says.

Retaining the stock over a long period in anticipation of higher prices has been the main reason behind the scarcity of natural rubber in the domestic market, says N. Radhakrishnan, a dealer and former president of Cochin Rubber Merchants' Association. The supply-demand position was changed by creating an artificial shortage, he says.

Case in China

It should be noted that China is allowed to import rubber at 7.5 per cent duty and the Chinese-made tyres have been reaching India.

With a high domestic price for rubber in India, the situation would be congenial for the Chinese manufacturer to export the product to India. It is nothing but indirect import of rubber, he points out.(The Hindu)