Mixed trend in rubber

Mixed trend in rubber


Kottayam, Nov. 16

Physical rubber prices saw a mixed trend on Tuesday. The undercurrent was weak following the declines on the National Multi Commodity Exchange (NMCE). There was no selling pressure in the market as widespread rains reported from the plantation areas had created supply fears. According to sources, major grades slipped on buyer resistance while ungraded rubber improved on comparatively better demand.

Among other news, China's total rubber consumption this year is estimated to reach 6.45 million tonnes, up by 9.7 per cent compared with last year, the China Rubber Industry Association said. Of this, natural rubber consumption is expected to rise 3.7 per cent to 2.8 million tonnes, while synthetic rubber consumption is forecast to rise 14.8 per cent to 3.65 million tonnes.

Sheet rubber weakened to Rs 197 (198) a kg in the main marketing centres. The grade moved down to Rs 197.50 (198) a kg both at Kottayam and Kochi according to Rubber Board. The transactions were in a low key.

Futures weak

In futures, the December series weakened to Rs 196.75 (200.18), January to Rs 198.62 (202.18) and February to Rs 202.60 (205.38) while the March series finished the debut trading session at Rs 205.61 a kg for RSS 4 on the NMCE. RSS 3 improved at with November futures risign to ¥357.3 (Rs 194.18) from ¥351 a kg during the day session and then slipped to ¥350 (Rs 190.21) in the night session on the Tokyo Commodity Exchange. The grade (spot) closed better at Rs 197.74 (196.49) a kg at Bangkok.

Spot rates were (Rs/kg): RSS-4: 197 (198); RSS-5: 187 (187); Ungraded: 184 (183); ISNR 20: 193 (195) and latex 60 per cent: 130 (130).




U.S. Producer Prices Rose 0.4% in October; Core Rate Fell 0.6%
Posted: 16 Nov 2010 06:35 AM PST
Wholesale costs in the U.S. rose less than forecast in October, reflecting declines in prices of cars, trucks and computers that shows limited demand is keeping a lid on inflation.

The producer price index climbed 0.4 percent from the prior month, Labor Department figures showed today in Washington. Economists projected a 0.8 percent rise in October, according to the median estimate in a Bloomberg News survey. The so-called core measure, which excludes volatile food and energy costs, decreased 0.6 percent, the most since July 2006.

Companies have little scope to raise prices to recoup higher commodity costs as the expansion has cooled from the first half of 2010 and unemployment is stuck near 10 percent. The figures underscore the Federal Reserve’s decision this month to purchase another $600 billion in assets to help spur growth and reduce the risk of deflation, or a prolonged drop in prices.

“Wage pressure is very little and this has only limited potential for boosting price levels,” said Robert Dye, a senior economist at PNC Financial Services Group Inc. in Pittsburgh, who correctly forecast the gain in the PPI. “If you look at specific sectors like commodities, we are seeing some inflation.”

Producer prices were projected to rise 0.8 percent, according to the median of 76 forecasts in a Bloomberg News survey. Estimates ranged from gains of 0.4 percent to 1.4 percent, after a 0.4 percent rise in September.

Excluding volatile food and energy costs, economists in the survey had forecast a 0.1 percent gain for a third month.

Stock Futures

Stock-index futures maintained losses and Treasury securities rose after the report. Futures on the Standard & Poor’s 500 Index expiring next month dropped 0.5 percent to 1,190.3 at 8:48 a.m. in New York. The yield on the 10-year Treasury note, which moves inversely to price, fell to 2.90 percent from 2.96 percent late yesterday.

New car prices dropped 3 percent in October, the biggest decline since July 2006. Prices of light trucks decreased 4.3 percent, the most since October 2006.

Today’s report included the Labor Department’s valuation of quality changes in 2011 model vehicles. The decline in prices for October indicates new vehicles were outfitted with better equipment or more options, while manufacturers kept price adjustments to a minimum.

Compared with a year earlier, companies paid 4.3 percent more for goods last month after a 4 percent rise in September.

Core PPI

Excluding food and energy, wholesale prices climbed 1.5 percent in the 12 months ended in October, following a 1.6 percent year-over-year gain the prior month. The survey median called for an increase of 2.1 percent.

The cost of food decreased 0.1 percent, while energy prices rose 3.7 percent.

Expenses for intermediate goods rose 1.2 percent from the prior month and were up 6.4 percent from a year earlier, today’s report showed.

Prices of crude goods, or materials used at the earliest stage of the production process, increased 4.3 percent, the most since January.

The costs of finished computers and equipment dropped 1.1 percent in October.

Inflation is decelerating after the world’s largest economy grew at a 2 percent or less annual pace over the past two quarters, less than the Fed’s long-term estimate. It expanded 3.7 percent in the first three months of the year.

Fed’s Preference

The Fed’s preferred gauge for consumer prices, which excludes food and energy, rose 1.2 percent in September from a year earlier, the slowest pace since 2001. Fed policy makers have a long-run goal of 1.7 percent to 2 percent inflation they see as consistent with achieving legislative mandates for maximum employment and stable prices.

“You don’t want inflation to be too high but you also don’t want it to be too low,” Fed ChairmanBen S. Bernanke said in a speech on Nov. 6. “Our purpose is to provide additional stimulus to help the economy recover and to avoid potentially additional disinflation which I think we all agree would be a worse outcome.”

The Fed is purchasing more Treasuries after having cut the benchmark rate almost to zero in December 2008 and buying $1.7 trillion in securities.

Costs of raw materials are rising. Rubber futures in Tokyo surged to a 30-year high on Nov. 11, followed by a decline the next day on concern that China, the largest user, may take more steps to curb inflation. The decline continued this week.

Cooper Tire

U.S. companies experiencing the elevated costs include Cooper Tire & Rubber Co., based in Findlay, Ohio.

“Raw material costs have continued to be elevated,” Roy Armes, chief executive officer of Cooper Tire, said on a Nov. 1 teleconference with analysts. Higher materials costs will continue through 2011, he said.

Producer prices are one of three monthly inflation gauges reported by the Labor Department. Prices of goods imported into the U.S. rose 0.9 percent from the prior month, the Labor Department said Nov. 10,

Consumer prices, the broadest of the three measures, probably climbed 0.3 percent in October and the core index had the smallest year-over-year advance since 1961, according to the Bloomberg survey. The figures are due tomorrow.

(Source: http://www.bloomberg.com/news/2010-11-16/u-s-october-producer-prices-rose-0-4-fell-0-6-excluding-food-energy.html)






Rubber Advances for First Time in Three Days on Weaker Yen, Low Supplies
Posted: 16 Nov 2010 06:33 AM PST
Rubber in Tokyo rebounded after a two-day slump, as the Japanese yen weakened to a six-week low versus the dollar amid low supply from the top three producers.

April-delivery rubber on the Tokyo Commodity Exchange surged as much as 2.8 percent to 363.6 yen per kilogram ($4,377 a metric ton) before trading at 361.3 yen at 12:40 p.m. local time. The contract fell 6.7 percent in the past two days after climbing to a 30-year high. The May-delivery contract in Shanghai advanced by as much as 4.2 percent to 35,170 yuan ($5,295) a ton after tumbling 11 percent in the past three days.

“The weakening yen helped improve market sentiment,” Chaiwat Muenmee, an analyst at DS Futures Co., said today by phone from Bangkok. “Fundamentally, low supply from Thailand, Indonesia and Malaysia remains price supportive.”

Futures in Tokyo have gained 31 percent this year as producers have had difficulty catching up with growing demand because of rain and flooding that disrupted latex output in Southeast Asia.

Natural-rubber output in Thailand may decline by 10 percent to 870,000 tons in the fourth quarter, reducing total production this year by 5 percent to 3 million tons, according to an estimate by the Thai Rubber Association. Annual supply may fall by 50,000 tons over the next seven years until new trees mature, association President Luckchai Kittipol said on Nov. 10.

The cash price in Thailand, the largest producer and exporter, was unchanged today at 131 baht ($4.39) per kilogram after climbing to a record of 132 baht on Nov. 12, according to the Rubber Research Institute of Thailand. The price is likely to rise as rain across the country’s south, the main rubber plantation area, will continue to limit supply, it said.

Low Stockpiles

Low stockpiles in Japan and China mean that buyers will continue purchases, said Chaiwat of DS Futures. Stockpiles held at Japanese warehouses fell 2.8 percent to 7,552 tons on Nov. 10, data from the Rubber Trade Association of Japan showed today.

China’s inventories increased 10,735 tons last week to 60,291 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said Nov. 12. That is a 60 percent decline from this year’s high of 151,832 tons.

The Japanese currency traded near a six-week low against the dollar before a report that economists said will show U.S. industrial production expanded last month, adding to signs the nation’s recovery is gathering pace.

U.S. industrial production increased 0.3 percent last month after dropping 0.2 percent in September, according to a Bloomberg News survey before today’s report. Retail sales rose 1.2 percent in October, the most in seven months, Commerce Department data showed yesterday.

The yen traded at 83.12 per dollar after falling to 83.27 yesterday, the lowest level since Oct. 6. A weaker Japanese currency improves the appeal of yen-based contracts.

(Source: http://www.bloomberg.com/news/2010-11-16/rubber-advances-for-first-time-in-three-days-on-weaker-yen-low-supplies.html)






No plans to fix maximum price of rubber: Anand Sharma
Posted: 15 Nov 2010 05:13 PM PST
Government today said it has no plans to put a ceiling on maximum price of natural rubber in the wake of a recent spurt in prices following disruption in rubber production due to adverse weather conditions.

"The government is of the view that fixation of any maximum price of natural rubber may not be desirable, keeping in view interests of all stakeholders and sustainable existence of the rubber sector as a whole," Minister of Commerce and Industry Anand Sharma said in response to a written query in Lok Sabha.The minister said the tyre manufacturers had averred that there was a shortage of natural rubber and demanded a ceiling on the maximum price of natural rubber.
Sharma said that the average prices of natural rubber in October 2010 had jumped by 66 per cent to Rs 181.12 per kg as against Rs 108.9 per kg in the corresponding period last year.
"The main reasons for the increase in rubber prices in India...Relatively low market arrivals, increasing demand in the domestic market and persisting adverse weather conditions in the major rubber growing regions of Kerala," Sharma said.
Natural rubber price has been continously rising for the last two months and have touched all time high of Rs 206 per kg in the domestic market, as continous rains have disrupted the rubber collection in Kerala, which accounts for 80 per cent of the country's production.
Rubber prices had also witnessed the similar trends in global market as floods and cyclone have damaged rubber plantation in key rubber growing countries such Malaysia and Thailand.

(Source: http://www.business-standard.com/india/news/no-plans-to-fix-maximum-pricerubber-anand-sharma/116032/on)





Rubber Futures Decline for Second Day Amid Concerns China Will Hike Rates
Posted: 15 Nov 2010 05:10 PM PST
Rubber in Tokyo tumbled for a second day after climbing to a record last week on concern that China, the largest user, may increase borrowing costs to curb inflation, reducing demand for the commodity used to make tires and gloves.

April-delivery rubber on the Tokyo Commodity Exchange declined as much as 4.3 percent to 344.6 yen per kilogram ($4,173 a metric ton) before trading at 351 yen at 10:28 a.m. local time. The contract fell as much as 5.7 percent on Nov. 12. The May-delivery contract in Shanghai fell by the daily limit to 33,415 yuan ($5,034) a ton.

“Investors are still in a selling mood on speculation that China may raise interest rates, which would cut demand for rubber,” Varut Rungkhum, an analyst at commodity broker Agro Wealth Ltd., said today by phone.

China’s government may step up measures to contain growth in housing and consumer prices after inflation accelerated to a two-year high last month. Inflation quickened to 4.4 percent in October from 3.6 percent in September, the statistics bureau said Nov. 11.

“China may raise interest rates by the end of this year,” stoking concerns that natural-rubber consumption may decline, Gu Jiong, an analyst at commodity broker Yutaka Shoji, said today by phone from Tokyo.

Rubber futures in Tokyo have gained 27 percent this year as producers have had difficulty catching up with growing demand because of rain and flooding that disrupted latex output in Southeast Asian countries.

China Inventory

China’s natural-rubber inventories increased 10,735 tons last week to 60,291 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said Nov. 12.

The cash price in Thailand, the largest producer and exporter, remained at a record 132 baht ($4.43) per kilogram on Nov. 12 as heavy rainfall affected supply, according to the Rubber Research Institute of Thailand.

Natural-rubber output in Thailand may decline by 10 percent to 870,000 tons in the fourth quarter, reducing total production this year by 5 percent to 3 million tons, according to an estimate by the Thai Rubber Association. Annual supply may fall by 50,000 tons over the next seven years until new trees mature and produce latex, association President Luckchai Kittipol said.

(Source: http://www.bloomberg.com/news/2010-11-15/rubber-futures-decline-for-second-day-amid-concerns-china-will-hike-rates.html)






IRCo's WEEKLY MARKET SNAPSHOT: 8 - 12 November 2010
Posted: 15 Nov 2010 05:08 PM PST
RCo's DCP still stayed above 400 US cents/kg as well as rubber prices on both physical and futures markets during the week despite there was a sudden fall in rubber prices and crude oil futures on Friday in the wake of concerns that Beijing might increase interest rates to pull down inflation in the country as its consumer price index (CPI) rose to 4.4% from a year earlier in October, together with seemingly overdone technical charts on rubber futures.



Nonetheless, a fall in rubber futures will be short-lived because it still rains in rubber planted areas, especially southern Thailand, Indonesia, and Malaysia at the present time, and it will extend into the coming week. At the same time, natural rubber imports to the biggest consumer, China, in October rose 60% to 160,000 tons compared with the same month last year. In the January - October period, its imports rose 6.2% to 1.5 million tons, according to the Chinese General Administration of Customs on 10 November 2010.



On the investment front, global stock and financial markets still moved on the back of fiscal and financial policies of the big-four global economic drivers, i.e. the U.S., China, Japan and Germany, and investors are awaiting some concrete measures that these key players compromised and pledged to work together in order to adjust and to boost an uneven global economy in the long-term after the latest G-20 Summit on 11 - 12 November in Seoul and the Asia-Pacific Economic Cooperation (APEC) Forum on 13 - 14 November in Yokohama.

(Source: http://www.irco.biz/MarketWise.php?PHPSESSID=72c7294422d73786ad940dba10900973)






Rubber prices soften but exports could put a stop to further decline
Posted: 15 Nov 2010 05:06 PM PST
Thrivananthapuram: After rising to historic highs, natural rubber prices have softened to Rs 200 per kg from Rs 206 per kg last week. However, market watchers said showers in Kerala's main plantation belt and rising exports are likely to keep prices well supported here onwards.

Sources at rubber bourses in Kottayam told FE that the drop in prices could bring more rubber smoked sheets (RSS), stockpiled by dealers, to the market. Dealers supplying to tyre firms had bought over 4,000 tonne of RSS this season, but only about 1,500 tonne have changed hands to the tyre firms.

“Apprehension of a reduction in tyre production by manufacturers has created fear of demand shrinking amongst traders. Several growers, on a wait-and-watch mode following the price rally, feel they had burned their fingers as industrial appetite seems to be somewhat petering out,” a senior official from the Indian Rubber Growers Association said.

The buzz that tyre firms were gearing up to increase product prices and absorb rubber price costs has not affected farmers. On the contrary, some optimistic growers are counting on price crossing Rs 230 per kg by the first quarter of 2011.

However, market sources said this kind of price spiral can be ruled out, if tyre companies are actually planning to trim production. Over 60% of India's annual natural rubber production is consumed by the tyre manufacturers.

Automative Tyre Manufacturers Association(ATMA) threat to rollback tyre production and rubber inventories has come following unexpected floods in rubber plantations of Thailand. Similar, adverse weather has impacted production in Indonesia and Malaysia too this season.

Tyre firms fear that rubber imports from these countries could be delayed, turning their production schedules haywire.

India'a tyre industry has been leaning heavily on imports this year, as indicated from the data provided by the Rubber Board. Natural rubber imports in the first seven months of the current financial year grew to 132,724 tonne as against 132,106 tonne in the corresponding period last year.

The Met department had predicted showers in the plantation belt of Kerala till the end of the month, which should help growers. Natural rubber prices zoomed nearly 100% during the last 12 months, a Rubber Board data showed. The average price in November 2009, was at Rs 113 a kg, which rose to Rs 206 per kg in the first half of November 2010.

(Source: http://www.financialexpress.com/news/Rubber-prices-soften-but-exports-could-put-a-stop-to-further-decline/711748/)






Flood help approved for rubber growers
Posted: 15 Nov 2010 05:05 PM PST
The Council of Economic Ministers on Monday approved a plan to compensate rubber farmers whose plantations were damaged by heavy flooding across the country.

Deputy government spokesman Marut Masayawanitrong said the government will pay assistance to flood-hit rubber farmers at a rate of 17,000 baht per rai (1,600 square metres).
The Agriculture and Cooperatives Ministry last Thursday reported that more than 310,000 rai of rubber plantations were flooded nationwide.
Prime Minister Abhisit Vejjajiva said the government was too slow in paying promised compensation of 5,000 baht to each flood-affected household.
Only 20,000 households had been paid and the Interior Ministry must instruct provincial governors to speed up the payment process, Mr Abhisit said.
The government initially estimated about one million households were eligible.



The Meteorological Department has warned people living on hill sides and near waterways in eight southern provinces to brace for heavy monsoonal rain, possible flash floods and mudslides from now until Wednesday.
Director-general Wibul Sangauanpong said the provinces at risk are Chumphon, Surat Thani, Nakhon Si Thammarat, Songkhla, Phatthalung, Yala, Pattani and Narathiwat.
He advised residents to listen closely to weather forecasts.
Mr Wibul said floodwaters are still inundating areas in seven provinces in the Northeast and another six in the Central Plains, affecting altogether 820,941 people.
The flooding continues in four provinces in the South, where a total of 672,098 people have been affected, he added.
A total of 224 people had been killed by the flooding that has hit many provinces since Oct 10. Of which, 152 were flood victims in the North, Northeast, East and Central Plains and 72 in the South.

(Source: http://www.bangkokpost.com/news/local/206504/more-flood-compensation-approved)






Rubber Project Requests Upgrade to Enterprise
Posted: 15 Nov 2010 05:04 PM PST
The National Nucleus Project of Rubber Plantation and Processing (NNPRPP) submitted a proposal to the Privatisation and Public Enterprises Supervision Agency (PPESA) to be reformed as an enterprise two weeks ago.

The agency asked for the proposal to be amended in a written reply made three days after the proposal’s submission, according to Million Worku, general manger of the NPRPP.

“One of the agency’s requests was to list the project’s capital, including the physical assets as well as money in the bank,” he told Fortune.

The proposal’s submission was confirmed by sources at the PPESA, who requested anonymity because they were not authorised to officially comment.

The project, which was previously under the Addis Tyre Factory, was initiated as a test project for the plantation of rubber trees on 10ht of land. However, Matador, the company which bought Addis Tyre through a joint venture (JV) in 2004, rejected the project and it was put under the supervision of the PPESA.

“The project’s capital was registered as 333 million Br at the time it was put under the PPESA,” Million told Fortune. “The proposal submitted to the agency includes the organisational structure of the enterprise to be formed, job descriptions, and plans for future expansion.”

Since being under the supervision of the agency, the project has been granted an additional 2,000ht plot in Bench Magi Zone, Southern Nations, Nationalities, and Peoples (SNNP) Regional State, where the previous plot is located.

Under the project, which has 100 employees, rubber trees have been planted on 1,438ht in addition to the previous 10ht bringing the total trees to 5,000, according to Million.

A rubber plant takes five to six years to begin producing the latex used to make rubber and can last up to 30 years.

“The project does not only want to concentrate on planting trees, but aims to install its own factory as well,” Million told Fortune. “We had a discussion with the Metal and Engineering Corporation (MetEC) for them to install the factory and we have visited factory sites in Côte d’Ivoire. It was agreed that it would be possible to install it using local resources.”

The project has been producing 1.8tn of latex from 10ht per month while the market demands 10,000tn annually, according to the general manager of the project, who added that most of the rubber used in Ethiopia is imported from Malaysia, Indonesia, and Thailand.

“The international price for a kilogramme of rubber is 60.2 Br, which is equal to the local price,” Million said. “The price of imported rubber increases significantly when transportation tax and duties are added to it.”

(Source: http://addisfortune.com/Rubber%20Project%20Requests%20Upgrade%20to%20Enterprise.htm)