Spot rubber weakens on buyer resistance

Spot rubber weakens on buyer resistance


Kottayam, Dec. 7

Spot rubber turned weak on Tuesday. The prices slipped on buyer resistance while most of the players stayed back letting the prices to settle at comfortable levels as rains subsided and almost came to a halt giving way to the beginning of the much awaited peak production season. But there was no improvement in arrivals yet or selling pressure from any corner, market circles reported.

The trend was mixed. Sheet rubber declined to Rs 197.50 from Rs 199.00 a kg in the main marketing centres. According to the Rubber Board, the grade finished weak at Rs 197.50 (198.50) a kg both at Kottayam and Kochi.

RSS 4 recovered partially at the December series to Rs 199.80 (198.00), January to Rs 202.70 (200.66), February to Rs 206.31 (204.63) and March to Rs 209.55 (207.84) per kg on National Multi Commodity Exchange (NMCE).

The volumes totalled 6,000 lots and open interest 6,445 lots. The turnover was Rs 121.05 crore.

The December futures firmed up to Rs 368.5 (199.37) from Rs 366.8 a kg for RSS 3 during the day session but then remained inactive in the night session on Tokyo Commodity Exchange (TOCOM).

RSS 3 (spot) closed at Rs. 202.70 (203.05) a kg at Bangkok. The spot rubber prices per kg were: RSS-4: Rs 197.50 (199.00), RSS-5: Rs 187.50 (188.00), Ungraded : Rs 182.00 (182.00), ISNR 20: Rs 190.50 (191.00), and Latex 60 per cent : Rs 128.00 (128.00)

Rubber Climbs to Two-Week High as Supply in Thailand Limited, Oil Advances
Posted: 06 Dec 2010 02:47 PM PST
Rubber climbed to a three-week high after a rally in oil raised the appeal of the commodity as an alternative to synthetic products used in tires and tight supply boosted the Thai cash price to a record.

May-delivery rubber on the Tokyo Commodity Exchange gained as much as 2.3 percent to 378.8 yen per kilogram ($4,569 a metric ton) before settling at 378 yen. The price climbed to the highest level since Nov. 11, when a most-active contract reached a 30-year high of 383 yen.

Oil advanced to the highest in 26 months in New York amid optimism fuel demand will increase. Physical rubber prices in Thailand, the biggest producer and exporter, increased to a record on Dec. 3 on a supply shortage, according to the Rubber Research Institute of Thailand. Futures also gained on expectation the Federal Reserve may take more steps to boost economic growth.

“Rubber chased a rally in oil and metals as investor demand for commodities increased amid speculation over U.S. monetary easing,” Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said today by phone. “Futures were also supported by the strength of physical rubber prices.”

Federal Reserve Chairman Ben S. Bernanke said U.S. unemployment may take five years to return to a normal level and that Fed purchases of Treasury securities beyond the $600 billion announced last month are possible.

Bernanke Comments

“At the rate we’re going, it could be four, five years before we are back to a more normal unemployment rate” of about 5 to 6 percent, Bernanke said according to the transcript of an interview aired today on CBS Corp.’s “60 Minutes” program.

Bernanke and other Fed officials have defended the central bank’s announcement that it will purchase $75 billion in Treasury securities a month through June to prop up a recovery so weak that only 39,000 jobs were created in November.

Oil for January delivery added as much as 0.6 percent to $89.76 a barrel in electronic trading on the New York Mercantile Exchange, the highest since October 2008, before trading at $89.69 at 4:53 p.m. Tokyo time. Higher oil boosts the cost of making synthetic rubber.

The cash rubber price in Thailand climbed to a record 134.05 baht ($4.46) per kilogram on Dec. 3, according to the Rubber Research Institute of Thailand. Demand remained strong amid a supply shortage as rain persists in southern Thailand, the institute said. Thailand’s south accounts for 80 percent of output. The Thai market was closed today for a holiday.

Bridgestone Corp., the world’s largest tiremaker, plans to raise Japanese prices of truck and bus tires by an average of 7 percent after rubber and petrochemical costs increased. The changes will take effect March 1, the company said in a statement on its website today.

May-delivery rubber in Shanghai added 1.5 percent to 32,835 yuan ($4,939) a ton. It reached a record 38,920 yuan on Nov. 11.

China’s natural-rubber inventories dropped for the first time in 10 weeks, declining 6,665 tons to 55,346 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the bourse said on Dec. 3.

(Source: http://www.bloomberg.com/news/2010-12-06/rubber-climbs-to-two-week-high-as-supply-in-thailand-limited-oil-advances.html)






Rubber weakens on lack of buying
Posted: 06 Dec 2010 02:44 PM PST
Kottayam, Dec. 6

Physical rubber prices improved on Monday.

According to sources, the market opened better and remained firm due to the lack of sellers on major grades, possibly following the gains in Tokyo Commodity Exchange. But it showed signs of weakness during closing hours as the domestic futures finished weak on NMCE. The trend was mixed.

Among other news, the Tokyo rubber futures hit a two-week high, catalysed by the rise in oil prices but the gains were limited due to a stronger yen.

Sheet rubber increased to Rs 199.00 (197.00) a kg according to traders. The grade finished firm at Rs 198.50 (198.00) a kg both at Kottayam and Kochi as reported by the Rubber Board.

The December series declined to Rs 197.90 (200.16), January to Rs 200.33 (203.18), February to Rs 204.32 (207.00) and March to Rs 207.71 (209.76) per kg for RSS 4 on National Multi Commodity Exchange.

RSS 3 firmed up at its December futures to A5 366.8 (Rs 199.04) from A5 361.7 per kg during the day session but remained inactive in the night session on Tokyo Commodity Exchange. The spot rubber prices per kg were RSS-4 — Rs 199.00 (197.00); RSS-5 — Rs 188.00 (186.00); Ungraded — Rs 182.00 (181.00); ISNR 20 — Rs 191.00 (191.00) and Latex 60% — Rs 128.00 (128.00).

(Source: http://www.wikinvest.com/wikinvest/api.php?action=viewNews&aid=2112112&page=&format=html&comments=0)






UBS cuts Michelin hopes amid rubber price fears
Posted: 06 Dec 2010 02:43 PM PST
Shares in Michelin slid 3% after UBS cut its rating on the stock to "sell", flagging the difficulties tyremakers are suffering in passing on higher costs of both natural and synethetic rubber.

The bank also lowered to "neutral" from "buy" its recommendation on shares in Japan's Yokohama Rubber and Sumitomo Rubber Industries, warning of rubber costs rising to $4.20 a kilogramme next year, some 20% higher than previous forecasts.

"While the price of [natural rubber] may reflect a spike, we expect supply constraints to remain significant, as demand for natural rubber looks set to exceed production," UBS analysts said.

"Beyond adverse weather conditions negatively impacting rubber harvests in the fourth quarter, supply of natural rubber looks set to remain tight as a result of ageing hevea trees and low levels of replanting."

'Weak link'

Meanwhile, prices of synthetic rubber, which also have a bearing on the market for natural alternatives, were rising too, up 9% in the past two weeks, thanks to rising prices of oil, from which it is made, and manufacturing constraints.

Breakdown of Michelin's raw material costs

Natural rubber: 28%

Synthetic rubber: 26%

Fillers:16%

Chemicals: 13%

Steelcord: 10%

Textile: 7%

Sources: Michelin/UBS

Such higher costs boded ill for tyremakers, who looked the "weak link in the value chain", facing increased competition as emerging market manufacturers hit the mainstream.

French-based Michelin looked especially at risk thanks to its "high exposure to natural rubber-intensive truck tyres and to price sensitive consumers and distributors".

Shares in the group closed down E1.67 at E54.58 in Paris, taking their decline since a late-September high to some 15%.

'New era'

The downgrades came as rubber touched a three-week high in Tokyo of 378.8 yen a kilogramme, for the benchmark May contract, lifted by the rising price of oil, and therefore implied inflation in synthetic rubber.

"Natural rubber prices have not decoupled from crude oil prices for the past few months," Ker Chung Yang at Phillip Futures said, seeing potential further rises in oil to $92 a barrel for next year.

Meanwhile, demand for the commodity remains high, boosted by surging demand for cars in developing countries, and in particular in China and India.

"General sentiment on natural rubber remains bullish on supportive fundamentals," Mr Ker said, forecasting a "new era" of high prices.

(Source: http://www.wikinvest.com/wikinvest/api.php?action=viewNews&aid=2112007&page=&format=html&comments=0)






M'sian rubber market seen to be firm this week
Posted: 06 Dec 2010 02:41 PM PST
KUALA LUMPUR The Malaysian rubber market is expected to be firm this week, dealers said.

A dealer said there may be concerns on supply contraints due to bad weather that had disrupted tapping and output.

Prices are likely to be supported at this level amid concerns over tight supplies, he said.

Previous week, the SMR 20 buyers' price breached its record high level of 1,335.0 sen previously, to settle at 1,340.5 sen per kg on Friday.

On a weekly basis, the Malaysian Rubber Board's official sellers' physical price for tyre-grade SMR 20 ended 31.5 sen higher at 1,351.0 sen per kg compared with 1,319.5 sen per kg previous Friday, while latex-in-bulk rose 25 sen to 907 sen per kg. The unofficial sellers' closing price for tyre-grade SMR 20 gained 41 sen to 1,354.0 sen per kg while latex-in-bulk went up 30 sen to 910.0 sen per kg.

(Source: http://biz.thestar.com.my/news/story.asp?file=/2010/12/6/business/7561754&sec=business)






Global rubber output expected to drop in Q4
Posted: 06 Dec 2010 02:39 PM PST
Kochi, Dec. 6

Following production shortfalls reported from India even during the peak production months of October-November, the Association of Natural Rubber Producing Countries (ANRPC) has predicted that global natural rubber production would fall by 3.8 per cent during the fourth quarter of the current year.

However, the ANRPC, which accounts for over 92 per cent of the global rubber production, has stated that the overall world production for 2010 would be on the higher side given major upward revision reported by Indonesia for Q3 and Q4. This was against smaller downward revisions reported by Thailand and Malaysia.

Indian dip

The production of natural rubber in India had declined by 5.4 per cent in November to 88,500 tonnes as against 93,500 tonnes during the same month last year, provisional estimates put out by the Rubber Board of India revealed.

However, the Automotive Tyre Manufacturers Association of India had pointed out that the actual rubber production data for November 2010 shows a far steeper fall at 15 per cent over the projected data for the month at 104,000 tonnes. But the cumulative production between April-November was up two per cent at 546,150 tonnes as against 530,900 tonnes last year.

India has also scaled up the country's production targets for 2010 to 853,000 tonnes from the earlier projection of 844,000 tonnes. Although rubber growing areas in India witnessed unusually heavy rains in November, the production forecasts are based on better than expected output during the third quarter of the current year.

Revised estimates put out by the Rubber Board show that production shortfall for the third quarter was only 1.8 per cent as against the 4.9 per cent expected earlier. The revised figures also reveal that supply is expected to grow by just four per cent this year and by 4.9 per cent in 2011.

Meanwhile, the total supply from the ANRPC regions is also expected to grow faster at 6.6 per cent this year, as against 5.3 per cent anticipated earlier. The upward revision has been mainly prompted by Indonesia, which reported a 33 per cent growth in rubber production in the third quarter as against an anticipated growth of 4.7 per cent. The output for Q4 is expected to jump by 18.6 per cent, making a marked recovery from the 1.9 per cent expected earlier.

The price boom seems to have tapped into the large number of dormant trees bringing old and neglected trees into productive operations and the country's production is expected to grow by 16.9 per cent to 2.85 million tonnes. However this accelerated pace of growth in Indonesia is not likely to be sustained into the coming years.

Thailand affected

Unusually heavy rains and floods during the first half of November have affected the supply of rubber from Thailand, especially from South Thailand which accounts for 80 per cent of the country's natural rubber output.

Reports from the Rubber Research Institute of Thailand indicate that an estimated 18,000 hectares of rubber area has been flooded and 15,600 hectares have been damaged by heavy winds. As a direct consequence, natural rubber supply from Thailand is expected to fall by 1.4 per cent to 3.12 million tonnes this year.

Lower Malaysian numbers

Malaysia too has scaled down its production growth to 13.2 per cent to 0.97 million tonnes this year, as against a production growth of 16.7 per cent and one million tonnes production expected earlier. Even this projection seems over optimistic given the severe monsoon rains which lashed the rubber growing regions of the country even in early November, ANRPC observed.

China's stringent fight against inflation could temper rubber price rise in global markets in the immediate future. Although the import of natural rubber and compound rubber into China are expected to be high during the third and fourth quarter of current year, the actual rubber consumption by the Chinese economy are expected to be much lower during the period.

(Source: http://www.thehindubusinessline.com/2010/12/07/stories/2010120753841800.htm)






IRCo's WEEKLY MARKET SNAPSHOT: 29 November - 3 December 2010
Posted: 06 Dec 2010 02:37 PM PST
IRCo's DCP ended the week at 439.35 US cents/kg., and it still pulled up its 14-day DCP on Friday. Rubber futures and physical markets in the region also settled higher on Friday than Monday because of persistent supply tightness and steady demand. A sharp rise in crude oil futures and an insignificant change in the Japanese yen against the greenback also lent support for rubber prices to climb up consecutively during the week.



Price volatility on Shanghai rubber futures is expected to be less than the past as the China Securities Regulatory Commission (CSRC) raised trading margins to more than 10% and limits on daily price moves starting on 26 November 2010 in order to curb speculation in futures markets, according to Reuters on 1 December 2010. And rubber prices are likely to stay above US$4.0 per kg. at least until 1Q11 as anticipated.



On the investment front, global stock markets were mixed during the week as concern over tension in Korean peninsular, European debt problems and a rise in the November unemployment rate of 9.8% in the U.S. undermined investor confidence that weakened the greenback against its rival currencies and lifted commodity prices, including crude oil futures and rubber prices. However, holiday shopping will boost consumer stocks in December at some levels.

(Source: http://www.irco.biz/MarketWise.php?PHPSESSID=9cbf002318dc75d77a0e4b89c10996ec)






Asian rubber: bridgestone buys rss3, china eyes warehouse goods
Posted: 06 Dec 2010 02:34 PM PST
Singapore (december 05, 2010) : japan's largest tyre maker, bridgestone corp, bought some rss3 rubber for forward shipment, but top consumer china was chasing cheaper thai grades from its own warehouses, dealers said on tuesday. indonesia's sir20 grade changed hands late on monday at $4.24 a kg for january shipment, and there were still inquiries for december cargo, which was offered at higher prices around $4.25 a kg.
"major tyre makers are still around, but they have moved to january and february shipment," said a dealer in singapore. "china is a bit quiet recently because prices in shanghai are cheaper," he added. rss3 was quoted at $4.32 on tuesday, down from a lifetime high at $4.40 offered last week, but dealers said thai grades already stored in warehouses in shanghai were a few cents cheaper.
bridgestone bought rss3 at $4.30 in deals done late on monday. natural rubber prices have hit an all time high above $4 a kg in southeast asia due to tight supply blamed on a combination of heavy rains and dry weather in producing countries, which helped spur rallies in tokyo and shanghai rubber futures.
"i heard china is looking to buy thai grades at $4.20, which is very cheap. that's for goods already in the warehouses, but i am not sure if anything has been traded," said a dealer in thailand's southern city of hat yai. "it's very low because the fob price in origin is already $4.30," he added. rubber inventories in warehouses monitored by the shanghai futures exchange rose 1.7 percent to 1,015 tonnes from a week earlier, the exchange said on friday.

(Source: http://www.brecorder.com/news/agriculture-and-allied/world/1130660:asian-rubber-bridgestone-buys-rss3-china-eyes-warehouse-goods.html?hl=rubber)