Rubber in Tokyo Advances to Five-Month High as Weather Cuts Thai Supplies

Rubber in Tokyo Advances to Five-Month High as Weather Cuts Thai Supplies
Posted: 30 Sep 2010 12:21 AM PDT
Rubber in Tokyo climbed to a five- month high as wet weather in Thailand limited supply. Shanghai futures declined.

The most-active contract advanced as much as 1.1 percent to 313.2 yen per kilogram ($3,744 a metric ton), the highest level since April 28, before trading at 311.2 yen on the Tokyo Commodity Exchange at 11:59 a.m. The price is set to rise more than 15 percent this quarter, the best advance since the three months ended Dec. 31.

Wet weather disrupted tapping rubber trees in Thailand, curbing latex production. Shippers in Thailand, the largest producer and exporter, raised offers for so-called RSS-3 grade rubber for November shipment to about $3.60 a kilogram from $3.52 at the end of last week, said Hisaaki Tasaka, an analyst at Tokyo-based broker ACE Koeki Co.

“A strong physical market gave support to futures in Tokyo,” Tasaka said by phone today. “Considering costs for imports, it’s more economical to buy the contract for physical delivery in Tokyo.”

The March-delivery rubber on the Shanghai Futures Exchange lost 0.5 percent to 26,780 yuan ($4,002) a ton at 11:01 a.m. local time. The market came under pressure as investors were reducing long, or buy, positions before holidays, Tasaka said. China’s financial markets will be closed from Oct. 1 to Oct. 7 for National Day holidays.

The price earlier advanced to 26,955 yuan after data showed yesterday China’s manufacturing quickened in September, increasing speculation demand will expand from the largest user of the commodity used in tires.

China Manufacturing

A China purchasing managers’ index released by HSBC Holdings Plc and Markit Economics rose to 52.9, the highest in five months, from 51.9 in August. The data are seasonally adjusted and readings above 50 indicate an expansion.

Still, gains in Tokyo rubber futures were limited by concern that demand from Japan may weaken as a stronger yen threatens export-oriented manufacturers, Tasaka said.

Japan’s industrial production unexpectedly fell in August, adding to concerns the nation’s export-led recovery is slowing. Factory output decreased 0.3 percent from July, when it declined 0.2 percent, the Trade Ministry said in Tokyo today. The median estimate of 26 economists surveyed by Bloomberg News was for a 1.1 percent gain.

Signs of slowing global demand and the yen’s appreciation are threatening earnings of companies from Murata Manufacturing Co. to Nissan Motor Co. Exports grew at the slowest pace this year in August and the Bank of Japan’s Tankan survey yesterday showed companies forecast pessimists will outnumber optimists by year-end.

The yen traded at 83.55 per dollar at 12:03 a.m. in Tokyo after climbing yesterday to 83.50, the highest level since Sept. 15, when it touched a 15-year peak of 82.88.

Cash price in Thailand fell 0.2 percent to 109.15 baht ($3.58) per kilogram as investors are concerned over strengthening yen and local currency, Rubber Research Institute of Thailand said on its website yesterday.

Limited supply following persistent rainfalls in southern Thailand remains price supportive, it said.

(bloomberg.com)





Rising rubber prices: How will it impact tyre companies?
Posted: 29 Sep 2010 10:05 PM PDT
While the rubber prices have fallen from the recent peak, they are still quite high. In an interview with CNBC-TV18, AK Kinra, CFO, JK Tyre, speaks about the impact of rising rubber prices on tyre companies.
Below is a verbatim transcript of their interview with CNBC-TV18's Anuj Singhal and Latha Venkatesh. Also watch the accompanying video.

Q: The topic of discussions is rubber prices. We have seen while they have fallen from the recent peak, but they are still quite high. In fact we have an expert predicting a 60% rally from these prices. What is your outlook?

A: As far as the rubber prices are concerned, after seeing a peak of about Rs 194-195 a kg, currently these are hovering between Rs 165 to Rs 168 a kg. These are still very high as compared to what you see in the last one-and-a-half year.
In the last one-and-a-half year, the prices have almost gone up as much as about one and a half times. Since rubber constitutes as much as about 40% of the total cost of production, these comprise a very high proportion to the cost of tyre.
The prices of tyres have not moved in the same proportion as the cost of rubber. So, this is where the situation is. The situation is not being helped by an inverted duty structure whereby the import duty on the imported rubber is very high and on the end product, which is tyre is low. It should always be the other way round. The customs duty on the raw material should be lower than the duty on the end product. So, that situation is not being helped by it.
I think this situation is very difficult situation for the industry. Though the demand for tyre is very good, but the prices of tyres have still not moved in consensus with the rubber price increases.

Q: Since the demand for automobiles is very strong at this point, why is it that you are not able to pass on? How much do you think you will be able to pass on in October, what impact on margins?

A: In couple of months, I am not able to say how the prices will move, but I personally feel it will all depend upon how the natural rubber prices behave. But if the natural rubber prices are where they are currently, I think the prices may move up by 1% to 1.5%. But if the prices behave very erratically then naturally the prices of tyre will move up. This will be very difficult at this stage to estimate what kind of increases will take place in the near future.

(moneycontrol.com)





Apollo Tyres in rubber chase
Posted: 29 Sep 2010 10:04 PM PDT
Calcutta, Sept. 29: Apollo Tyres plans to acquire rubber plantations abroad to keep a check on rising raw material costs.

Onkar S. Kanwar, chairman and managing director of the company, said Apollo was scouting for acquisitions as well as exploring opportunities for new plantations in the south Asian region.

“We want to have at least 20-25 per cent of our natural rubber requirement from captive sources. Our people are now examining opportunities in Southeast Asia,” Kanwar told The Telegraph.

Indonesia, Thailand and Malaysia are the top three natural rubber producers, but Apollo may go to a new location with a similar climate (plenty of sun and rain), with Vietnam an option.

India is almost out of bounds for the nation’s top tyre manufacturer as large areas of land necessary for plantations are not available. Kerala is the largest producer of rubber, while the Andamans has similar conditions, but the government is not willing to allow plantations there.

Apollo uses 12,700 tonnes of natural rubber every month in its facilities in India, Africa and Europe. Natural rubber prices have jumped to Rs 180 a kg from Rs 100 a kg in the last one year, dealing a blow to profitability.

Apollo owns the Dunlop brand in 32 African nations and has plants in South Africa, Zimbabwe and Vredestein in the Netherlands, besides India..

New facilities

Apollo is keen to set up a facility in east Europe two years after its plan to enter the region suffered a setback because of political opposition to land acquisition in Hungary.

“We are fortunate it did not work out then as the economic slowdown followed soon after. But now we are eager again and ready to spend $200 million for it (the unit),” Kanwar said.

It is also keen on a manufacturing presence in Southeast Asia. Tyre is mostly a localised business, and a large domestic market is a pre-requisite for a manufacturing presence.

The new plants, along with the upcoming Chennai unit, will help Apollo to realise its ambition to become one of the top 10 manufacturers in the world.

(telegraphindia.com)





Spot rubber rules steady
Posted: 29 Sep 2010 10:03 PM PDT
On Wednesday (29 September 2010), the spot rubber prices ruled steady as the market managed to sustain at current levels mainly on supply concerns. Sheet rubber ended flat at Rs. 168.50 per kg in main marketing centres.

The October futures for RSS 4 declined to Rs. 171.50 (172.37), November to Rs. 173.30 (175032), December to Rs. 176.04 (177.19) and January to Rs. 178.25 (179.17) per kg on the National Multi Commodity Exchange.

Spot rates were (Rs/kg): RSS-4: 168.50 (168.50); RSS-5: 165 (165); ungraded: 162 (162); ISNR 20: 163 (163) and latex 60 per cent: 115.50 (115.50).

(indiainfoline.com)





Malaysia New Vehicle Sales Up 12.8% in August
Posted: 29 Sep 2010 10:02 PM PDT
Malaysia’s new vehicle sales in August rose from 48,937 units last year to 55,208 units this year or up 12.8% year on year, according to the Malaysian Automotive Association. The increase in auto sales in August this year was boosted by robust sales ahead of the Hari Raya festive period in September.

The Association expected that auto sales for September would slow down after the festive period was over. For the first eight months, the auto sales rose from 351,846 units in 2009 to 409,806 units in 2010 year on year.

(irco.biz)





Vietnam's Rubber Export Rose in January-August Period
Posted: 29 Sep 2010 10:01 PM PDT
Vietnam exported 427,000 tons of natural rubber (NR) in the first eight months, up 10.33% year-on-year with the value of US$1.15 billion, up 18.9% year-on-year, according a recent report by the Vietnam General Statistics Office.

In August, Vietnam exported about 100,000 tons of NR, earning US$250 million, an increase of 28% in volume and of 90% in value year-on-year.

Vietnam's major rubber export markets in this period are comprised of China, Malaysia, the Republic of Korea and India.

For 2010, Vietnam is forecast to export 770,000 tons of NR, up 6.4% in volume, according to a recent report by Xinhua News.

(irco.biz)





A New Natural Rubber Export Tax Scheme
Posted: 29 Sep 2010 10:00 PM PDT
Thailand is going to increase a natural rubber (NR) export tax, which is currently collected at 1.4 baht per kg, to be 2 baht if the price stays below 80 baht per kg, to be 3 baht per kg if the price stays between 80 baht and 100 baht per kg, and to be 5 baht per kg if the price stays above 100 baht per kg respectively. The new scheme will be effective from 1 October 2010 onwards.

The objective of the above new scheme is to raise a national NR fund for multi-purposes of national rubber development, including financial support for rubber-smallholders when NR prices fall below their costs of living. Furthermore, it will be an incentive for foreign investors to invest and to produce more finished rubber products in Thailand at lower costs of production than overseas.

(irco.biz)





India's NR Imports Declined by 17% in August
Posted: 29 Sep 2010 09:47 PM PDT
India imported 18,834 tonnes of natural rubber (NR) in August, down 17% from 22,640 tonnes last year. The total NR import to India was mostly consumed by tyre manufacturers. For the April-August period of the current fiscal year, imports declined by nearly 28% to 75,042 tonnes from 103,483 tonnes in the same period of 2009, according to the Indian Rubber Board.

However, India’s NR production in August rose by nearly 12% to 72,500 tonnes, compared with the same month last year on an increase of acreage under rain guarding, a system which prevents rain from interfering with the tapping of rubber trees. In August 2009, India had produced 64,750 tonnes of NR. Consumption in August this year dipped slightly to 79,000 tonnes from 79,750 tonnes a year ago.

(irco.biz)


Rubber meet to focus on industry's challenges


Kottayam, Sept 30

The Annual Rubber Conference 2010 hosted by the Government of India will be held at the Le Meridien Convention Centre, Kochi, on October 6. This year the conference of the Association of the Natural Rubber Producing Countries focuses on ‘Natural rubber industry in the new decade: opportunities, challenges and strategies'.

Mr K.V. Thomas, Minister of State for Agriculture, will deliver the inaugural address. Mr A.K. Mangotra, Additional Secretary, Ministry of Commerce, would give a special address. Mr Le Quang Thung, Acting Chairman, Vietnam Rubber Group, will preside, and Mr Sajen Peter, Chairman Rubber Board, will welcome the delegates.

There are three sessions to be followed by a panel discussion. Senior scientists, researchers and others would participate in this. The NR markets in the last two years have been governed by predictions and uncertainties in supply. Some visualised and oversupply of NR after 2012 on account of extensive planting area since 2005.

The challenges faced by NR producing countries, the strategies and programmes contemplated for the near future and so on, would be subjected to detailed discussions.

The annual conference would be an effective platform for interactions and networking, among the various stake holders, including policy makers, researchers and analysts.

The members of the Association of the Natural Rubber Producing Countries are Cambodia, China, India, Indonesia, Malaysia, Papua New Guinea, the Philippines, Singapore, Sri Lanka, Thailand and Vietnam.


Spot rubber rules steady


Kottayam, Sept 30

Spot rubber continued to rule steady on Thursday. According to sources, the market activities were in an extremely slow pace as most of the traders were reluctant to enlarge their commitments following the uncertainties prior to the Ayodhya verdict. The volumes were low. Sheet rubber closed unchanged at Rs 168.5 a kg amidst scattered transactions. The grade was quoted higher at Rs 168.5 (168) on the Board's Web site.

Futures gain

The October series moved up marginally to Rs 172.2 (171.39), November to Rs 173.96 (173.44), December to Rs 176.68 (176.12), and January to Rs 178.98 (178.67) a kg for RSS 4 on the National Multi Commodity Exchange. The volumes totalled 2,584 lots, and open interest 4,164 lots. The turnover was Rs 44.71 crore. The October futures improved to ¥297.5 (Rs 160.53) from ¥298.5 during the day session, and then to ¥298.8 (Rs 161.24) a kg for RSS 3 during the night session on Tokyo Commodity Exchange. RSS 3 (spot) closed weak at Rs 161.21 (161.45) a kg at Bangkok.

Spot rates were (Rs/kg): RSS-4: 168.5 (168.5); RSS-5: 165 (165); ungraded: 162 (162); ISNR 20: 163 (163) and latex 60 per cent: 115.5 (115.5).