Spot rubber stays steady

Spot rubber stays steady


Kottayam, Nov. 26

Spot rubber continued to finish unchanged on Friday. An almost similar trend on NMCE and declines in the Japanese markets kept the sentiments almost neutral, an observer said. Sheet rubber finished flat at Rs 199.50 both at Kottayam and Kochi according to dealers and Rubber Board. The volumes were extremely narrow.

“Assuming normal weather conditions, we are estimating a rise in production in 2011,” said Mr. Jom Jacob, Senior Economist, ANRPC. “ Demand from tyre makers is rising in every country. But in the short term, we have to see what measures China is taking to curb inflation,” he added. “Weather surprised every one in the last two months and still it is not favourable for tapping. The phenomenon is unlikely to allow prices to drop from current levels,” said Mr. George Valy, President, Indian Rubber Dealers Federation.

Futures firm

In futures, the December series closed at Rs 200.55 (200.38), January at Rs 203.65 (203.33), February at Rs 205.50 (205.82) and March at Rs 208.50 (209.03) a kg for RSS 4 on National Multi Commodity Exchange (NMCE).

The volumes totalled 5796 lots and the turnover at Rs 117.67 crores. The total open interest in all series was 6301 lots.

RSS 3 weakened at its December futures to ¥354 (Rs 193.57) from ¥356.3 during the day session but then to ¥350 (Rs 191.35) a kg in the night session on the Tokyo Commodity Exchange (TOCOM). The grade (spot) slipped to Rs 200.14 (200.15) a kg at Bangkok.

Spot rates were (Rs/kg): RSS-4: 199.50 (199.50); RSS-5: 187.50 (187.50); ungraded: 183.50 (183.50); ISNR 20: 192.50 (192.50) and latex 60 per cent: 130 (130).



Tokyo rubber futures fall three percent
Posted: 25 Nov 2010 03:22 PM PST
Tokyo (november 25, 2010) : key tokyo rubber futures fell more than 3 percent on wednesday as global financial markets were rattled by heightened tensions in the korean pennisula following a north korean artillery attack on a south korean island near the border. the key tokyo commodity exchange rubber contract for april delivery settled at 359.5 yen per kg, down 10.3 yen or 2.8 percent. it fell as low as 356.4 yen, the lowest since november 18.

the april benchmark contract had climbed as high as 375.9 yen on friday, the highest since november 12. the benchmark contract will switch to may from thursday. deliveries against the november futures contract fell 25 percent from last month to 214 lots or 1,070 tonnes. the nearby november contract expired at 354.9 yen per kg. the most active rubber contract for may delivery on the shanghai futures market closed at 32,285 yuan ($4,859) per tonnes.

(Source: http://www.brecorder.com/news/agriculture-and-allied/world/1127488:tokyo-rubber-futures-fall-three-percent.html?hl=rubber)






Natural Rubber Supply May Beat Forecast on Indonesia, Producer Group Says
Posted: 25 Nov 2010 03:20 PM PST
Natural rubber supply this year may be more than forecast last month as growers in Indonesia boost output to benefit from record prices, a producers’ group said.

Production may increase 6.6 percent to 9.5 million metric tons, more than the 9.4 million tons forecast on Oct. 27, the Association of Natural Rubber Producing Countries said in an e- mailed statement today. Supply may drop 3.8 percent in the three months to Dec. 31 as rain disrupts tapping in Thailand, the biggest producer and exporter, the group said.

Rubber in Tokyo has climbed 30 percent this year as rain in Thailand, Indonesia and Malaysia, the top three growers, interrupted tapping and lowered production. Futures on the Tokyo Commodity Exchange reached a 30-year high of 383 yen on Nov. 11.

Total supply would be more than earlier predicted because Indonesia’s estimates for the third and fourth quarter have “undergone major revisions to the higher side” against a downward adjustment for Thailand and Malaysia, Jom Jacob, the group’s senior economist, said in the statement.

Thailand’s rubber supply this year may drop 1.4 percent to 3.12 million tons and rebound 4.1 percent to 3.25 million tons next year, the group said. Indonesia’s output may jump 16.9 percent to 2.85 million tons this year and climb further to 2.94 million tons in 2011, it said.

The price boom appears “to have prompted the dominant smallholders in Indonesia to exploit the maximum possible yield from their trees,” Jacob said. Indonesia’s production gained 33.1 percent in the three months to Sept. 30 and may increase 18.6 percent in the October to December period, he said.

China Drop

China’s consumption of natural rubber, including compound rubber, may drop 2 percent in the fourth quarter as the government takes steps to cool commodity prices, the group said. Imports of all forms of natural rubber may climb 7.1 percent to 3.26 million tons this year and increase by 6 percent to 3.45 million tons in 2011, the group said.

“Natural rubber markets do not appear to have received any notable support from the demand side,” Jacob said. “Concerns over China’s new policy measures clouded demand expectations.”

April-delivery rubber on the Tokyo Commodity Exchange gained as much as 2.6 percent to 368.7 yen per kilogram ($4,419 a ton) before settling at 362.6 yen today.

Chinese Premier Wen Jiabao’s government has raised interest rates, increased the reserve requirement for banks and pledged to use price controls if needed as part of efforts to rein in inflation that reached 4.4 percent last month. Analysts at nine banks surveyed by Bloomberg News last week predicted the PBOC will boost borrowing costs a second time by the end of the year.

China’s recent moves to crack down on speculation in commodities have worked, and prices of goods from cotton to copper have all declined, the National Development and Reform Commission said in a statement on its website today.

(Source: http://www.bloomberg.com/news/2010-11-25/natural-rubber-supply-may-beat-forecast-on-indonesia-producer-group-says.html)






Rubber Futures Advance as U.S. Data Raise Demand Outlook, Supply Limited
Posted: 25 Nov 2010 03:18 PM PST
Rubber increased as improvement in U.S. employment and consumer sentiment boosted speculation that demand will expand for the commodity used in tires, and as supply is limited from Thailand, the largest exporter.

April-delivery rubber on the Tokyo Commodity Exchange gained as much as 2.6 percent to 368.7 yen per kilogram ($4,419 a metric ton) before settling at 362.6 yen. The price reached a 30-year high of 383 yen on Nov. 11.

Asian stocks advanced after data showed U.S. jobless claims dropped to the lowest level since 2008, bolstering optimism that economic growth will accelerate. Rubber supply from Thailand and other Asian producers remains tight after rain and flooding disrupted plantation work, saidKazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co. in Tokyo.

“The market drew support from good economic data from the U.S.,” Saito said by phone today. “Fundamentals remain positive as supply is curbed by weather problems.”

The cash price of natural rubber in Thailand gained 0.2 percent to 131.55 baht ($4.38) per kilogram today, boosted by strong demand amid a supply shortage, according to the Rubber Research Institute of Thailand. The price reached a record 132.75 baht per kilogram on Nov. 23.

The U.S. Labor Department said jobless claims fell to 407,000 last week. The median projection of economists surveyed by Bloomberg News called for a drop to 435,000. The Thomson Reuters/University of Michigan final index of November consumer sentiment increased to 71.6, the highest level since June and exceeding the median economist estimate of 69.5.

Shanghai Futures

May-delivery rubber in Shanghai lost 1.8 percent to 31,690 yuan ($4,765) a ton at 2:42 p.m. local time. The price retreated from a record 38,920 yuan on Nov. 11 on concern that China, the largest consumer, may take additional steps to curb inflation and slow its economic growth, Saito said.

China’s central bank said it will strengthen liquidity management and “normalize” monetary conditions after having twice this month ordered banks to hold more in reserves to curb inflation that’s at a two-year high.

The nation will use quantitative and price tools to manage liquidity, Hu Xiaolian, a deputy governor of the People’s Bank of China, said in a statement posted to the central bank’s website yesterday. China will also control the pace of bank lending for the remainder of this year as it will be difficult to stay within the government’s 7.5 trillion yuan ($1.13 trillion) target for new loans in 2010, she said.

Premier Wen Jiabao’s government has raised interest rates, increased the reserve requirement for banks and pledged to use price controls if needed as part of efforts to rein in inflation that reached 4.4 percent last month. Analysts at nine banks surveyed by Bloomberg News last week predicted the PBOC will boost borrowing costs a second time by the end of the year.

China’s recent moves to crack down on speculation in commodities have worked, and prices of goods from cotton to copper have all declined, the National Development and Reform Commission said in a statement on its website today.

(Source: http://www.bloomberg.com/news/2010-11-25/rubber-futures-advance-as-u-s-data-raise-demand-outlook-supply-limited.html)






Rubber exporters worried
Posted: 25 Nov 2010 03:13 PM PST
Thailand's rubber exporters are concerned Chinese policies to control inflation will impose import quotas.

China is among the world's largest natural rubber importers and is Thailand's biggest buyer, purchasing 1.16 million tonnes from the kingdom of the 2.46 million total it imported in 2009.

Luckchai Kittipol, president of the Thai Rubber Association, said exporters are concerned about import restrictions.

China's continued robust economy, especially in the automobile industries, has driven demand for rubber the past few years. Demand for rubber was 7.74 million tonnes last year _ 3.47 million tonnes of para rubber and 4.27 million of synthetic rubber.

This year, rubber demand is forecast to reach 8.11 million tonnes, comprising 3.44 million of natural rubber and 4.67 million tonnes of synthetic rubber.

China's capacity in tyre manufacturing totals 654.6 million units while it exports tyres at a rate of 123.22 million radial units.

China expects to buy over 30% of Thailand's 2.85 million tonnes of rubber exports this year.

Mr Luckchai is still optimistic this year's rubber exports will meet the association's target of 200 billion baht in income.

In the first nine months of this year, the country shipped two million tonnes of rubber products worth 170 billion baht.

The association is attending the 10th International Exhibition on Rubber Technology to be held today through Saturday at the Exhibition Centre in Shanghai to explore trade opportunities and showcase technologies and innovation in rubber products from Thailand.

(Source: http://www.bangkokpost.com/business/economics/208032/rubber-exporters-worried)






Tyre makers hit by surging rubber prices
Posted: 25 Nov 2010 03:12 PM PST
Results for the September quarter were a non-event for tyre companies. While these companies were putting together the financials for the period, natural rubber price in the country (RSS-4 grade) shot up sharply beyond the quarter’s average price of around Rs.165 a kg. By mid-October, it jumped toRs.190 per kg and climbed further to the present level of around Rs.202 per kg. This is around 22% higher than last quarter’s average price. The fact that rubber costs account for almost half of the total cost of producing a tyre means that profit margins of these firms will be squeezed.

The surge in prices is not a recent short-term aberration either. Rubber prices have risen by as much as 150% in the past two years, from levels ofRs.76/kg in November 2008.

International prices, too, have shot up in a similar fashion, giving no opportunity for companies to import at lower costs. Reports suggest that the price in Thailand—the world’s largest rubber producing nation—at around $4.3 (Rs.196) a kg, has not only tripled since early 2009, but also surpassed the peak of 1952, when fears of Korean war triggered panic buying.

Prices are rising because of a demand-supply gap. Officials at the Rubber Board of India say that incessant rains hit supply this season. While the cultivation acreage is increasing, it would not be before 2012-13 that the new plantations would add to production. According to estimates by the Rubber Board, India’s rubber production is expected to increase by 9% to 890,000 tonnes in 2010. But demand, supported by the auto boom and high consumerism, would be higher at around 970,000 tonnes, according to industry experts. This gap in supply is expected to keep prices buoyant.

Globally, too, rains played havoc, resulting in lower production in three of the world’s largest rubber producing nations—Thailand, Indonesia and Malaysia. And this comes at a time when rubber inventories are at the year’s low in China.

Like global tyre firms, Indian companies have taken price increases to offset the impact of higher rubber prices. Leading tyre makers such as Apollo Tyres Ltd, MRF Ltd, Ceat Ltd and JK Tyre and Industries Ltd have increased tyre prices by 12-15% in the last one year.

Yet, as the chart indicates, all tyre makers have seen profitability steadily declining in the last four quarters. And this also despite increasing volumes, thanks to the boom in the auto sector. The reason is that raw material cost increases continue to surpass the hike in tyre prices. Apollo’s operating margin fell to 10.3% last quarter, down from 16.4% a year ago, while MRF’s margins fell by 690 basis points to 9.8%. Smaller firms were worse off; Ceat and JK Tyres reported wafer-thin margins of 4% and 6.2%, respectively.

Surjit Arora, an analyst at Prabhudas Lilladher Pvt. Ltd, says that tyre firms may see no respite in profit margins in the next two quarters, unless rubber prices soften. They would have to increase tyre prices by at least 3-6% to sustain the present profit margins.

Shares of all tyre makers have reacted adversely since the first quarter of fiscal 2011, due to fall in profitability and the grim outlook in the near term. Barring MRF, where strong management and low-liquidity support the share price and which rose 16% amidst these adversities, shares of Apollo, Ceat and JK fell by 6%, 10% and 27% from 1 April till date. But strong volumes and revenue momentum could turn the fortunes sharply if the key raw material gives respite.

(Source: http://www.livemint.com/2010/11/25212044/Tyre-makers-hit-by-surging-rub.html?atype=tp)