Rubber Futures Decline as High Price Curbs Demand, Set for Weekly Gain

Rubber Futures Decline as High Price Curbs Demand, Set for Weekly Gain
Posted: 03 Dec 2010 02:44 PM PST
Rubber declined as end-users slowed purchases on higher prices, while heavy rains in Thailand continued to cut supply in the largest exporter, boosting the cash price to a record. Futures were still set for a weekly gain.

May-delivery rubber on the Tokyo Commodity Exchange declined as much as 0.7 percent to 369.1 yen per kilogram ($4,417 a metric ton) before settling at 370.4 yen. The price reached a 30-year high of 383 yen on Nov. 11.

End-users such as tire makers slow purchases as they draw down stockpiles, said Hisaaki Tasaka, an analyst at Tokyo-based broker ACE Koeki Co. “High prices sapped demand from physical buyers,” he said by phone today. “They will wait for prices to retreat.” Crude rubber stockpiles held at Japanese warehouses fell 2.3 percent to 7,375 tons on Nov. 20, data from the Rubber Trade Association of Japan showed yesterday.

The cash rubber price in Thailand climbed to a record, rising 1.5 percent to 134.05 baht ($4.46) per kilogram today, according to the Rubber Research Institute of Thailand. Demand remains strong amid a supply shortage as rains persist in southern Thailand, the institute said. Thailand’s south accounts for 80 percent of total production.

“Heavy rains in Thailand’s southern provinces raised worries over tightening supply,” Chaiwat Muenmee, analyst at DS Futures Co. said by phone from Bangkok. The monsoon covering southern Thailand may cause flash floods in the next two days, the Department of Disaster Prevention and Mitigation said today.

May-delivery rubber in Shanghai advanced 2.1 percent to close at 32,365 yuan ($4,858). The price reached a record 38,920 yuan on Nov. 11.

Supply Deficit

Global consumption of natural rubber will outpace supply by 313,000 tons this year, the most since 2006, Goldman Sachs Group Inc. forecast in a November report, revising its September outlook for an 82,000-ton deficit.

A natural-rubber shortage in India, the world’s biggest consumer after China, may widen almost five times over the next decade as rising incomes boost demand for tires, according to an industry group.

The deficit may widen to 840,000 tons in 2020 from 175,000 tons next year, Vinod Simon, president of the All India Rubber Industries Association, said in an interview. In 2015, the shortage may be 687,000 tons, Simon said.

The forecast underscores India’s rising demand for commodities as economic growth stokes consumer demand and the government boosts infrastructure spending. India’s “commodity demand has reached a tipping point, and growth is set to accelerate significantly,” Barclays Capital said last month.

Bridgestone Corp., the world’s largest tiremaker, expects to cut rubber use by 50 percent in the next decade to cope with rising raw material costs, Masayuki Ishii, general manager at the corporate communications division, said in an interview.

The company will use 1.77 million tons of natural and synthetic rubber for tire production this year, up 24 percent from 2009, he said.

(Source: http://www.bloomberg.com/news/2010-12-03/rubber-futures-decline-as-high-price-curbs-demand-set-for-weekly-gain.html)






Tokyo rubber futures up two percent
Posted: 03 Dec 2010 02:42 PM PST
Bangkok (december 03, 2010) : tokyo rubber futures rose more than 2 percent to the highest in nearly two weeks on thursday, tracking gains on stock markets, with positive global economic data providing additional support, dealers said. the benchmark contract on the tokyo commodity exchange for may delivery rose 8.2 yen, or 2.2 percent, to settle at 371.7 yen ($4.42) per kg, the highest since november 22.
tocom rubber was expected to rise further to test resistance at 380 yen on friday after prices finished above the psychological level of 370 yen, dealers said. a rally in commodities on wednesday helped spur follow-through buying, with sharp gains in us wheat and gasoline futures after positive economic data from the united states and china and a stronger euro boosted investor confidence about demand. us auto sales rose 17 percent in november from a year earlier, a stronger-than-expected gain that pointed to a slow but steady return in consumer demand from the depressed levels of a year ago.

(Source: http://www.brecorder.com/news/agriculture-and-allied/world/1130012:tokyo-rubber-futures-up-two-percent.html?hl=rubber)






Rubber Deficit in India to Surge as Rising Demand Outstrips Local Output
Posted: 03 Dec 2010 02:40 PM PST
A natural-rubber shortage in India, the world’s biggest consumer after China, may surge almost five times over the next decade as rising incomes boost demand for tires, according to an industry group.

The deficit may increase to 840,000 metric tons in 2020 from 175,000 tons next year, Vinod Simon, president of the All India Rubber Industries Association, said in an interview. In 2015, the shortfall may be 687,000 tons, Simon said.

The forecast underscores India’s rising consumption of commodities as economic growth stokes consumer demand and the government boosts infrastructure spending. India’s “commodity demand has reached a tipping point, and growth is set to accelerate significantly,” Barclays Capital said last month.

“The rubber deficit may stay longer than we imagine as car sales continue to rise and a growing population boosts demand for health care products,” Anand James, chief analyst at brokerage Geojit Comtrade Ltd., said from Kochi, Kerala.

The stronger consumption in India may help sustain this year’s 34 percent rally in yen-priced futures. The contract on the Tokyo Commodity Exchange, which reached a 30-year high of 383 yen ($4.57) per kilo on Nov. 11, traded at 370.4 yen today. In India, spot prices in Kerala rose last month to more than 200 rupees ($4.43) a kilo for the first time. The Thai cash price surged to an all-time high today of 134.05 baht ($4.46) a kilo.

‘Still Be There’

The “increasing population of India will drive the market for rubber products,” Simon said yesterday from Bangkok, capital of the largest rubber producer and exporter, where he’s attending a conference. “Shortage will still be there.”

Rubber consumption may climb to 1.89 million tons in 2020, compared with 930,000 tons this year if the economy expands at 8.5 percent a year, Simon said. The South Asian nation’s economy grew 8.9 percent for a second straight quarter in July to September, a government report showed on Nov. 30.

India may expand faster than China in the next 10 years if the government boosts spending on roads and bridges and lifts investment curbs, New York University professor Nouriel Roubini said yesterday. “China is likely to slow in the coming years gradually and India’s growth is likely to accelerate,” boosted by a young population and higher consumption, Roubini said.

‘Through the Roof’

India’s Trade Secretary Rahul Khullar said this week that rubber demand is “going through the roof,” and local output from the world’s fourth-largest producer wasn’t going to expand dramatically. The government may allow imports of as much as 100,000 tons at a lower duty to help meet demand, Khullar said.

India’s rubber output totaled 88,500 tons in November, compared with 93,500 tons a year ago, according to figures from the state-run Rubber Board. Imports in the eight months to Nov. 30 totaled 143,468 tons from 139,321 tons as tire companies stepped up purchases, the board said.

“Rubber will remain a sellers’ market, as it has been in the past two to three years, as the demand-supply equation is unlikely to change soon,” James said. Thailand, Malaysia and Indonesia are the top three producers. Natural-rubber supply this year may total 9.5 million tons, according to the Association of Natural Rubber Producing Countries, whose members account for 92 percent of worldwide output.

Demand from India’s auto industry is expected to increase “substantially” in the coming years after investments by tire makers including Bridgestone Corp. and Michelin & Cie., said Simon. Annual car sales may double to 3 million by 2015, according to a projection from India’s government.

Bridgestone and Indian rivals including Apollo Tyres Ltd. and MRF Ltd. are investing $3 billion in plants to meet demand that’s forecast by Automotive Tyre Manufacturers’ Association to expand 10 percent to 106 million tires in the year to March 31. Rubber makes up 42 percent of raw-material costs, according to the manufacturers’ group.

(Source: http://www.bloomberg.com/news/2010-12-03/india-s-natural-rubber-shortage-may-surge-fivefold-on-demand-group-says.html)






Cash Rubber Price in Thailand Climbs to Record 134.05 Baht a Kilogram
Posted: 03 Dec 2010 02:38 PM PST
The cash rubber price in Thailand climbed to a record, rising 1.5 percent to 134.05 baht ($4.40) per kilogram today, according to the Rubber Research Institute of Thailand. Demand remains strong amid a supply shortage as rain persists in southern Thailand, the institute said. Thailand’s south accounts for 80 percent of total production.

(Source: http://www.bloomberg.com/news/2010-12-03/cash-rubber-price-in-thailand-climbs-to-record-134-05-baht-a-kilogram.html)






Retreaders do well as rubber, tyre prices fly
Posted: 03 Dec 2010 02:35 PM PST
Commercial vehicle (CV) owners are finding tyre retreading a feasible option, owing to the increasing tyre prices. Rajiv Budharaja, director general of Automotive Tyres Manufacturers Association, said:

“Currently, rubber prices are historically high, due to which the tyre manufacturers are increasing output costs. As a result, the CV owners and transporters are opting for options like tyre retreading that gives them a cost benefit of almost 50-60% as compared to buying a new tyre.”

The price of rubber has almost doubled in the past one year, and tyre manufacturers have hiked prices 2-3 times this year.

Despite this, the companies are unable to pass on the prices due to strong competition. Rubber is currently trading at Rs205 per kg.

Meanwhile, in the last six months, the demand for tyre retreading has risen 8-10% on month-on-month basis.

“The total turnover of this industry is Rs4,500 crore on an annual basis and 16,000 tonnes on a monthly basis. We are observing a major shift in demand for retread tyres,” said A S Mehta, marketing director, JK Tyre.

According to Gopal Singh of Tyresoles, a Karnataka-based tyre retreading company, “June onwards, we have seen almost 36% increase in demand. We manufacture 13,000 tyres in a month. We plan to increase production owing to higher demand. In December, we expect demand to go up by 10-20%.”

The industry is divided into organised and unorganised players.

Currently, among tyre manufacturers, MRF Tyres, Apollo Tyres and JK Tyre are into the retreading business. Owning to the potential, companies like Ceat and Bridgestone have also announced interest in the same.

JK Tyre currently has a manufacturing facility in Rajasthan for retreading and is planning to expand capacity by next year.

It also plans to increase the number of franchisees from current 60 to 200 by next year.

In tyre retreading, a new tread is applied over the body of the worn tyre, giving it a fresh lease of life at a cost that is less than half the price of a new tyre.

The process increases the life of a tyre by 40-70%, depending on the usage.

Better road conditions and an increasing number of 14-, 18- and 22-wheel trucks have increased the demand for retreading tyres.

Generally, buses and light CVs that carry short-distance haul go for retreading in order to save cost. With overloading being substantially curbed, trucks have also started going for this process.

There are two types of retreading — the conventional process and the pre-cured process.The pre-cured process is more advance and provides better performance and quality.

It is currently the preferred option, while the conventional method is phasing out.

(Source: http://www.dnaindia.com/money/report_retreaders-do-well-as-rubber-tyre-prices-fly_1475684)






Synthetic rubber consumption to go up: Lanxess
Posted: 03 Dec 2010 02:32 PM PST
Lanxess, speciality chemicals and leading synthetic rubber, on Friday said it sees a big jump in the rubber consumption in the country driven by increasing demand from tyre makers particularly radial tyres.

The company said India with a long history in production and consumption of natural rubber is currently undergoing a shift towards replacing natural with synthetic rubber in a variety of applications, Lanxess Managing Director & Country Representative Joerg Strassburger told reporters.

Thus providing a base for the increase in consumption of synthetic rubber in the country particularly driven by radial tyre demands in the country.

Most tyre companies in India are in an advanced stage of setting up greenfield projects for manufacturing radial tyres for trucks and buses and companies already having production facilities are also undergoing capacity expansion, he said at a day-long conference hosted by the company here.