Rubber in Tokyo Extends Rally to 30-Year High, Shanghai Climbs to Record

Rubber in Tokyo Extends Rally to 30-Year High, Shanghai Climbs to Record
Posted: 10 Nov 2010 05:20 AM PST
Rubber futures in Tokyo extended a rally to a 30-year high, while futures in Shanghai surged to a record on concern that rainfall across Southeast Asia will further squeeze tight supply and after China’s car sales soared.

April-delivery rubber on the Tokyo Commodity Exchange gained as much as 1.4 percent to 370.2 yen a kilogram ($4,525 a metric ton), the highest level since February 1980, before settling at 369.7 yen. The contract has rallied 34 percent this year. May-delivery rubber on the Shanghai Futures Exchange gained for an eighth day, climbing as much as 2.8 percent to a record 38,400 yuan ($5,782) a ton.

“Disaster across Thailand, Indonesia and Malaysia has squeezed tight supply, increasing worries over a supply shortage,” Sureerat Kunthongjun, an analyst at AGROW Enterprise Ltd., said by phone today from Bangkok. “Reports on crop losses in Thailand also fueled the rally today.”

Recent floods and storms are expected to damage 540,814 rai (213,821 acres) of rubber plantation land, government spokesman Watchara Kannikar said Nov. 9. That is equivalent to 4.5 percent of the country’s tappable area of 12 million rai, according to Bloomberg calculations. Rainfall and floods spread across two- thirds of Thailand, including the southern part, which represents about 68 percent of the total plantation area.

The cash price in Thailand, the largest producer, gained 1.6 percent to 130 baht ($4.40) per kilogram because rain in the south has cut supply, the Rubber Research Institute of Thailand said today. The price touched a record 130.55 baht on April 27. The rubber-trading center in Songkhla province was closed for three days from Nov. 2 because of floods.

Prices may surge above 150 baht by the end of this year as “demand remains robust while supply is limited,” said Supachai Phosu, deputy minister of agriculture and cooperatives.

China Car Sales

“Higher car sales in China reiterated optimism that demand for natural rubber will continue to grow,” AGROW Enterprise’s Sureerat said.

China’s passenger-car sales in October rose at the fastest pace in six months as government incentives for fuel-efficient cars boosted purchases in the world’s largest auto market.

Wholesale deliveries of cars, sport-utility vehicles and multipurpose vehicles increased 27 percent from a year earlier to 1.2 million last month, the China Association of Automobile Manufacturers said in a statement on Nov. 9.

China, the world’s bigger user of natural rubber, introduced a 3,000 yuan ($450) subsidy for energy-efficient vehicles in June to help cut smog. Consumers may also be bringing forward purchases because they’re unsure if the government and carmakers will extend buying incentives into 2011, said Xu Minfeng, an analyst at Central China Securities Holdings in Shanghai.

China’s auto demand is expected to be strong for the rest of the year, analysts from Citigroup Inc., JD Power & Co. and IHS Automotive have said.

(bloomberg.com)





La Nina Event May Be Near Peak, Last Into 2011, Australian Bureau Predicts
Posted: 10 Nov 2010 05:20 AM PST
A La Nina weather event, which has brought heavier-than-usual rainfall to parts of Asia and dry weather to Argentina and Brazil, remains moderate-to-strong and may be peaking, according to Australia’s Bureau of Meteorology.

Tropical Pacific Ocean temperatures, a La Nina indicator, were significantly cooler than average for this time of year, the bureau said on its website today. Air-pressure differences measured by the so-called southern oscillation index, another sign of the event, equaled record October levels, it said.

La Nina-linked rains have deluged estates and mines in Southeast Asia, helping drive rubber to a 30-year high, curbing tin output in Indonesia and flooding rice fields from Vietnam to the Philippines. In South America, dry weather caused by La Nina may hurt Argentine corn and soybeans, ETF Securities has said.

“We are either somewhere near the peak, or it may be another month or two before we see the peak,” Andrew Watkins, manager of climate prediction at the Melbourne-based bureau, said by phone today. “There isn’t a strong chance it will weaken off from we are now for the next month or so.”

The event, which has strengthened since September, has contributed to Australia’s wettest August-to-October period on record and may cause more cyclones this season near the Queensland coast, according to the bureau. Queensland Sugar Ltd., Australia’s largest shipper, cut its shipment forecast today on the wet weather, saying nationwide exports may slump 20 percent.

‘Event Will Persist’

“Long-range models surveyed by the bureau suggest that this La Nina event will persist into at least early 2011,” the bureau said.

Rubber in Thailand may reach an all-time high this year after floods in the south, Supachai Phosu, deputy minister of agriculture, said yesterday. Yen-denominated futures in Tokyo have gained 34 percent this year to the highest level since 1980.

La Ninas occur on average every three to five years and can last nine to 12 months, according to the U.S. National Oceanic and Atmospheric Administration. The event can also intensify hurricane development in the Atlantic Ocean.

Rainfall in Malaysia, the second-largest palm-oil producer, may be as much as 40 percent above normal this month and in December as the La Nina strengthens, the nation’s forecaster has said. Palm oil traded today at the highest level in more than two years in Kuala Lumpur.

(bloomberg.com)





India's Tire Makers Plan to Raise Prices by 5% Next Month, Standard Says
Posted: 10 Nov 2010 05:19 AM PST
India’s tire companies may raise prices by as much as 5 percent next month after natural rubber prices climbed in recent weeks, the Business Standard reported, citing Satish Sharma, chief of India operations at Apollo Tyres Ltd.

(bloomberg.com)





China May Limit Fertilizer Exports to Increase Domestic Supplies, CRU Says
Posted: 10 Nov 2010 05:18 AM PST
China may cut exports of fertilizers including urea and diammonium phosphate this year to boost local supplies and lower prices after some cooking oils, cotton, sugar and rubber surged to records this week, an analyst said.

“There’s speculation China may release a comprehensive package of policies aimed at restricting crop-nutrient exports to ensure domestic supplies and protect farmers’ interests as soon as December,” Gavin Ju, a consultant at research company CRU, said in an interview in Beijing yesterday.

Reduced shipments from China, among the world’s largest suppliers of urea and phosphate fertilizers, will expand the market for Canada’s Potash Corp. of Saskatchewan Inc., U.S.- based CF Industries Holdings Inc. and Mosaic Co., Australia’s Incitec Pivot Ltd. and their rivals. Urea prices gained 56 percent since May to $340 a ton, according to spot prices tracked by ICIS.

“Any move to restrict Chinese fertilizer exports will inevitably reduce global supply and drive up prices,” Ju said.

Cotton prices in China almost doubled since the beginning of September to a record 33,720 yuan ($5,077) a ton today, while natural rubber futures in Shanghai also nearly doubled in the past year to a record 38,000 yuan a ton today. Sugar, palm oil and rapeseed oil also advanced to all-time highs as reduced domestic production, robust demand and inflation concerns all spurred investments in agricultural products in China.

Rising Exports

China was the world’s largest urea exporter in 2007 and is ranked as one of the largest phosphate fertilizer exporters.

Urea exports jumped to 3.69 million metric tons in the first nine months this year, 83 percent higher than a year earlier, according to CRU estimates. Diammonium phosphate exports also gained, Ju said.

China levies about a 7 percent tariff on urea exports during the non-peak seasons, which run from July 1 to Sept. 15 and from Oct. 16 to Jan. 31, and 110 percent during the rest of the year, the peak season. The government may advance the start of the peak season to Dec. 1 this year, lower the base prices for urea and diammonium phosphate, which would effectively raise the non-peak tariff for urea to 10 percent during non-peak season, Ju said.

The cost of fertilizer output is rising in China, as urea and methanol are produced from coal. Prices of the fuel at Qinhuangdao port, a benchmark for China, rose to the highest in nine months on Nov. 1 on expectations of a colder-than-usual winter.

The price of power-station coal with an energy value of 5,500 kilocalories per kilogram rose 2.7 percent to as much as 775 yuan a metric ton on Nov. 1 from a week earlier, according to data from the China Coal Transport and Distribution Association. That’s the highest since Feb. 8.

(bloomberg.com)





Tyre makers up on price hike reports
Posted: 10 Nov 2010 05:15 AM PST
Shares of tyre manufacturers were trading higher following a newspaper report that companies may raise tyre prices to counter rising natural rubber prices, dealers said. According to the Business Standard report, tyre companies have raised prices four times since January. Indian rubber futures hit reord high on global cues last week.

At 2.47 p.m., shares of MRF , JK Tyres & Industries , Ceat and Apollo Tyres were up 1.49-3.76 percent.

(economictimes.indiatimes.com)


Short supplies spur spot rubber prices
Our Correspondent

Kottayam, Nov. 10

Spot rubber turned better on Wednesday. The market opened steady but moderate gains in the domestic and international futures kept it on the positive side during closing hours.

Continuous rains in the past couple of days put pressure on arrivals and the market seemed to be suffering from acute short supplies.

Sheet rubber improved to Rs 203 (202) a kg both at Kottayam and Kochi according to Rubber Board and dealers. Expectations on another bull run in the immediate future seemed to be guiding the traders and growers to hold the stocks while the trend was mixed and volume low.

RSS 4 increased further at its November series to Rs 205 (204.03), December to Rs 208.14 (207.66), January to Rs 210.19 (209.64) and February to Rs 211.90 (211.33) a kg on the National Multi Commodity Exchange. The November futures for RSS 3 firmed up to ¥365.6 (Rs 197.50) from ¥361 during the day session and then to ¥370.9 (Rs 200.37) a kg in the night session on the Tokyo Commodity Exchange. The grade (spot) flared up to Rs 195.49 (191.44) a kg at Bangkok.

Spot rates were (Rs/kg): RSS-4: 203 (202); RSS-5: 194 (193); ungraded: 190 (190); ISNR 20: 199 (198) and latex 60 per cent: 131 (131).