Rubber, palm oil prices to ease
Experts say the surging prices of rubber and palm oil could ease in the coming months, although healthy demand will keep the overall trend above last year's level.
Pranart Pipithkul, an economist with the Office of Agricultural Economics, named the recent floods that reduced the plantation area of rubber trees as the main reason for the jump in rubber prices.
The price of rubber sheet will grow increasingly volatile this year in line with seasonal factors and changing demand.
Prices will likely decline in March and April based on seasonal declines in demand before picking up in May and June on inventory stockpiles.
Production will increasingly slow down in February, March and April prior to the expected May price increase, said Ms Pranart. The rubber sheet price will also move in line with the oil price.
The rubber sheet price is expected to average 115-120 baht a kilogramme this year, up from 102 baht last year. It soared by 23% from 130 baht a kilogramme in mid-December to 160 baht last Thursday.
Praneet Chotikirativech, senior director of the Bank of Thailand's Southern Region Office, said the floods and heavy rains reduced rubber sheet production by a third, driving up the price.
The high price boosted the economies in dense plantation areas such as Surat Thani, Nakhon Si Thammarat and Songkhla provinces.
Mr Praneet said southern farmers enjoyed an average income increase of 60% last year against a 30% decline in 2009, mostly from rubber and palm oil.
The floods and heavy rains subsided this month, but rubber sheet remains in short supply worldwide. The weather change has also caused rubber plants to shed their leaves, preventing cutting, said Mr Praneet.
He said the palm oil price had also spiked to a record high of nine baht a kilogramme, from 6.50 baht last year.
The price mainly tracks that of petrol since it is used in biodiesel production but has increased significantly due to a shortage. It will likely ease in the coming months.
The central bank said in a report that the International Rubber Study Group (IRSG) expects world production of rubber to stand at 11 million tonnes, with Thailand ranking tops in terms of volume at 3.4 million tonnes, followed by Indonesia (three million), Malaysia (one million) and India (910,000).
The group expects China's rubber demand to keep rising in line with its plan of becoming a major automotive manufacturing centre over the next decade with annual production capacity of 30 million cars, up from 17 million now.
The central bank report said the weather change prohibiting rubber tree cutting is an upside opportunity for the price. However, the downside risk is Bridgestone's technology that demands less use of natural rubber in tyre manufacturing in favour of synthetic rubber.
Rising rubber prices hitting Punjab Inc
CHANDIGARH: Turbulent rubber prices are giving jitters to industry. For the last two years, prices of rubber have shown undue turbulence. The prices have gone up from under Rs 100 per kg to over Rs 245 per kg. The prices of rubber have gone up by 63% in 2010. Punjab has wider use of rubber for industrial production. India is the fourth largest producer of natural rubber and second largest consumer in the world after China.
Rough estimates suggest that Punjab’s industry uses more than 12% of the total rubber in the country. Jalandhar being the hub of rubber footgear production and with unexpected upsurge in the rubber prices, this vital industry is almost on the verge of extinction. As of now, only 100 odd units in Punjab are struggling for survival. Cheap products from China have further contributed to this catastrophe.
“Undue restrictions are responsible for unbridled rise in the prices. Natural rubber is erroneously being taken as agricultural commodity, whereas, it is an industrial raw material,” says APEX chamber of Commerce president P D Sharma.
Industry mavens feel that cess of Rs 1.5 per kg needs to be removed and natural rubber should be freely allowed to be imported to the country with a certificate from approved laboratory along with the consignment to certify the quality of natural rubber imported.
Tokyo rubber futures near two-week low
Bangkok (january 27, 2011) : the key tokyo rubber futures contract fell to its lowest in nearly two weeks on wednesday as broad weakness in commodity markets triggered profit-taking as players feared that prices had risen too fast, dealers said. the benchmark rubbercontract on the tokyo commodity exchange for july delivery, which made its debut on wednesday, fell 3 yen from the opening price to settle at 457.2 yen ($5.56) per kg, the lowest for a benchmark since january 14.
the previous benchmark june contract fell as much as 16.5 yen, or 3.4 percent, to finish at 460.1 yen per kg. the most active rubber contract on the shanghai futures exchange for may deliver fell 385 yuan to settle at 39,280 yuan ($5,967) per tonne. deliveries against the january rubber futures contract, which expired on tuesday at 478.2 yen, stood at 314 lots or 1,570 tonnes, more than double december's deliveries.
Rubber surge hits footwear industry in India’s Punjab
JALANDHAR (Commodity Online) : The footgear industry in Jalandhar in the Indian State of Punjab is getting jitters with rubber prices in the country heading north.
The price of natural rubber, previously traded for Rs.100/kg now hovers around Rs.245 a kilogram. In 2010 alone, the price surged by 63%. The footwear industry bemoans the price surge where 100 odd units are struggling for survival.
Punjab’s industry has stretched the consumption of rubber to 12% of total rubber produced in the country.
India is the fourth largest producer of natural rubber and the second biggest consumer of the same. China ranks first in rubber consumption.
The restrictions in place for natural rubber import and exports have unnecessarily pushed the prices up, industry players feel. They also give thumbs down to Rs.1.5 cess on rubber.
They believe that rubber should be classified as an industrial raw material rather than an agricultural commodity.
Price of rubber doubled last year
The price obtained from rubber production has doubled from year 2009 to 2010, according to the Ministry of Plantation Industries.
“The price of one Kg of rubber on average in 2009 was Rs.202.79 but in 2010 it was Rs. 402.75,” Minister of Plantations industries Mahinda Samarasinghe said.
He said rubber production had also increased from 137,000 metric tonnes in 2009 to 150,000 metric tonnes in 2009. In certain instances the price goes up to Rs. 570 or 580, he added.
However the Minister was unclear on the figures of how much loss the industry incurred due to the inclement weather conditions in the past months. He stated that at present demand overrode the necessary supply and expressed his hope that local produce could fulfill the total requirement needed for the production of value added rubber products.
Auto Cos May Import Tyres to Meet Shortfall in India
For customers looking at early car deliveries in 2011 may have to wait a little longer, as manufacturers facing severe tyre shortages in local market are now hunting in China, Thailand, Korea and Malaysia to meet their new production targets. Car companies are looking at importing tyres to make up for the shortages that are affecting their 2011 production plans.
Already facing component shortages that led to lower production for most car companies in 2010, major carmakers like Maruti Suzuki India , Tata Motors and Hyundai Motors are planning import of tyre, anticipating a 25% increase in production in 2011 from the 28.14 lakh cars produced in 2010 calendar year.
Indian carmakers claim that tyre shortages in the domestic market have forced them to venture overseas, as the local manufacturers couldn’t meet their required demand.
“Inconsistent supply of tyre has hampered production for the major part of 2010. Keeping in view the higher production targets of 2011, we have planned tyre purchase overseas markets for meeting our long-term commitments, as we aim a 14-lakh units production in next fiscal ,” said a senior executive of Maruti Suzuki, who preferred not to go on record.
Shortages for tyres come as carmakers are already at loggerheads with component suppliers with shortages of several critical parts affecting production. Carmakers say that sufficient component supply would have helped them to produce 20% more cars in 2010. Lower production has led to long waiting period of up to 4-5 months on many popular cars like the Maruti Swift, Volkswagen Polo, Toyota Innova.
Taking contingency measures, the Indian car industry that consumed over 10 million tyres in 2010 feels that supplies of tyres in the domestic market could fell short by around 10% of their demand and wants to fill their gap by imports. There are many factors which have affected auto production in India. While components were in short supply as demand peaked in the past few months, we do not anticipate an immediate solution in the shortterm and availability of tyres is a matter of concern,” said Pawan Goenka, president, Society of Indian Automotive Manufacturers , who also head automaker Mahindra & Mahindra Ltd.
The decision of carmakers comes after major truck and bus manufacturers like Tata Motors and Ashok Leyland are already importing tyres from China and Thailand to offset shortages in the domestic market. While shortages has been a long-drawn issue, the abnormal increase in prices of raw material prices in 2010 created several production problem to the Indian tyre sector. The increase in natural rubber prices that currently peaked to. 207/kg has forced domestic tyre companies to divert more supplies to used market that fetch higher margins.
Typically most tyre companies supply 60-65 % production to carmakers and the rest is targeted to after market, but in 2010 on the back of spiralling production cost, most tyre players restricted supplies to carmakers to 50% of their production. Automotive Tyre Manufacturers’ Association says that supplies is a commercial decision and despite facing tougher times, Indian tyre industry is increasing production capacities that would facilitate high availability in coming months.
“Keeping in view the buoyant market, several tyre companies are investing into new capacities that would cater to the increased demand . While current production is also adequate for the domestic automakers, importing tyres from overseas markets could also be a commercial decision, as some of the imported tyres are cheaper than the Indian ones,” ATMA director general Rajeev Budhiraja said.
(The Economic Times, India, January 27, 2011)
China CPCIF suggests regulating rubber prices to rescue tire industry
BEIJING, Jan 26, 2011 (Xinhua via COMTEX) --
China Petroleum and Chemical Industry Federation (CPCIF) has called for regulatory measures taken by related authoritative departments on natural rubber prices in a bid to ease tire industry's cost pressure including selling of reserve rubber, and cut or cancellation of import tax.
Since the fourth quarter of last year, domestic natural rubber prices have been rising persistently and have already topped 40,000 yuan/tonne. With soaring rubber prices, the downstream tire industry has incurred losses on the whole.
Decreasing self-sufficiency of natural rubber is a key reason to trigger price rise. In 2005, the self-sufficiency rate dived under the internationally recognized security line of 30 percent, and continued to remain at low levels in the following years, 25 percent in 2007, 22 percent in 2009 and likely 20 percent in 2010.
CPCIF held that cost pressure, demand expansion and adverse weather are three factors to prop up prices of natural rubber.
As natural rubber prices are rising crazily, tire industry will suffer losses and the downstream automobile and machinery industries are expected to be affected given the 20 percent of import tax rate on prices and 2,000 yuan/tonne on volume, many tire enterprises said.
In the short term, rubber prices can only be stabilized by selling state stockpiles and removing import tariff, an unnamed industry noted. (Edited by Liu Xiaoyun, liuxy08@xinhua.org)
For full details on China Petroleum & Chemical Corporation ADS (SNP)SNP. China Petroleum & Chemical Corporation ADS (SNP) has Short Term PowerRatings at TradingMarkets.
Rubber Demand to Grow 4.6% in 2011, Outpace Supply, Group Says
Natural rubber demand may grow 4.6 percent this year, boosted by strong vehicle sales, with consumption continuing to outpace supply in coming years, according to the International Rubber Study Group.
Global consumption may gain to 11.2 million metric tons in 2011 and 11.6 million tons next year, said Stephen Evans, the group’s secretary general. The supply deficit will support prices of the commodity used to make tires and gloves, he said.
Rubber gained to a record this week, extending a 50 percent advance in 2010, as rising car sales led by China and India boost demand, and rains disrupted tapping in key growing nations ofSoutheast Asia. Natural rubber demand in China, the biggest consumer, may rise 9 percent this year, said the Association of Natural Rubber Producing Countries.
“From the fundamental point of view, we don’t see relief coming in the next few years because of over-demand and undersupply,” said Evans. “The price is likely to stay firm,” he said.
Demand may rise further to 13.1 million tons in 2015 and 15.4 million tons in 2020, while production may be about 13.8 million tons, said Evans. The estimates are based on normal production conditions, excluding a potential increase in supply from new plantings and increased tapping driven by high prices, he said.
Above-average rain from a La Nina weather event has curbed output in Indonesia, Malaysiaand Thailand, the biggest producer. The weather pattern may last until the middle of the year, causing higher-than-usual rainfall in Thailand during January to April, the Thai Meteorological Department has said.
Further Tightness
“If the demand stays strong, we’ll see further tightness in the market,” Evans said. Still, it isn’t “worrisome, as high prices will encourage tappers,” he said.
The most-active contract on the Tokyo Commodity Exchange gained as much as 3.2 percent today to 474.8 yen per kilogram ($5,725 a ton).
Futures fell 4.6 percent in the past two days after reaching a record 484.9 yen on Jan. 24 on worries China may take additional steps to curb inflation, reducing demand. China raisedinterest rates twice in the fourth quarter in a bid to choke off inflation.
“In the fast-moving economy like China, even a significant move may not be enough to slow it down,” Evans said. “There is no fundamental evidence that demand will go off a cliff.”
Natural rubber consumption in China may rise to 3.6 million tons this year and India’s consumption may gain 5.2 percent to 991,000 tons, according to the Association of Natural Rubber Producing Countries.
China Growth
China’s economy grew 10.3 percent in 2010, the fastest pace in three years and up from 9.2 percent a year earlier, the government said this month. China’s vehicle sales may grow 10 percent to 15 percent this year after jumping 32 percent to 18.06 million vehicles in 2010, according to a forecast by the China Association of Automobile Manufacturers.
Natural-rubber supply from members of the Association of Natural Rubber Producing Countries, which represent 92 percent of global supply, may expand 4.8 percent this year to about 9.9 million tons, the group said Jan. 25. The forecast is lower than an “optimistic target” by member governments of 7.7 percent growth to 10.2 million tons, it said.
The International Rubber Study Group counts 16 countries plus the European Union as members, according to its website. Thailand and Malaysia, the world’s largest and third-largest producers, are part of the group, while Indonesia, the second- largest grower, is not.
Thursday, January 27, 2011
SpirallIng rubber price a cause for concern
SpirallIng rubber price a cause for concern
Natural rubber could be the ultimate bubble if its price keeps rallying at current rates, the Thai Rubber Association warned last week.
"Demand for rubber is now stronger than gold," said Luckchai Kittipol, the association's president.
Last year, the price of natural rubber rose about 80 per cent with an average of Bt106 per kilogram (US$3,600 a tonne) and, in the first two weeks of this year, shot up more than 40 per cent. The cash price last Friday reached a record of Bt175.3 per kilogram due to supply shortages and rising demand from the automobile industry, according to the Rubber Research Institute of Thailand.
"Rubber prices have been rising sharply since late last year and are higher than expected now. This raises concerns that if the prices rise further, problems will emerge. Our rubber growers will suffer later [if the prices fluctuate]," Luckchai said.
It is difficult to say what a reasonable price should be now when there is speculation and less supply in the market, but the price should not be higher than Bt150 per kilogram, he said.
Rubber growers need price stability rather than fluctuations, he said. Volatile prices easily cause problems when they peak and plunge dramatically if an asset is overpriced or speculators abruptly shift to more attractive assets.
Natural rubber prices have extended rallies since late last year due to the heavy rainfall in top rubber-producing countries, including Thailand and India, the low production season, inventory taking by rubber growers and middlemen, and growing demand for rubber futures. Speculation by cross-border traders and global investors also triggered a spike in prices.
Last year, prices of commodities especially rubber and precious metals like gold and silver, surged due partly to the shift of global investors to seek higher-yielding assets elsewhere after the US dollar had been weakening.
China, the world's largest rubber consumer, uses about 3 million tonnes of natural rubber a year, while rubber futures trading reached almost 5 million tonnes in only a month.
"This isn't the real price. It's a bubble. This situation is expected to continue until there's confidence that rubber will be sufficient or its prices are too high," he said.
The May-delivery contract in Shanghai gained 2.1 per cent to 40,985 yuan ($6,224) a tonne last Friday, according to Bloomberg.
The global demand for natural rubber is expected to be unchanged from last year at 10.3 million tonnes, while supply could be slightly higher at 10.4 million tonnes this year.
Most thought that natural rubber was in short supply but actually it was kept in inventories, Luckchai said. The global inventories amount to 1.5 million-1.6 million tonnes, while Thailand keeps about 400,000-500,000 tonnes in stock.
"Thailand has been slowing down natural rubber sales, while China is speeding up purchases to keep it in factories," he said. This situation could drive up natural rubber prices.
Thailand, Indonesia and Malaysia account for about 94 per cent of the global production of natural rubber. India is another big producer and the fourth largest consumer. Thailand is expected to produce 3.3 million tonnes of natural rubber this year, of which about 2.8 million tonnes could be exported. Last year, the country's export volume declined by 0.2 per cent to 2.73 million tonnes, while its value soared 83.4 per cent to $7.89 billion.
China, the United States and Japan dominate global rubber consumption, boosted by strong growth in motor-vehicle production and manufacturing. China is estimated to consume 3.5 million tonnes of natural rubber in 2011, followed by the US with 900,000-1.1 million tonnes.
However, declining stockpiles in China may help cool down the shooting prices of the plantation commodity. Natural rubber inventories in China declined for a second week, losing 3,143 tonnes to 65,532 tonnes, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange was quoted by Bloomberg as saying. That is 57 per cent lower than last year's peak of 151,832 tonnes.
Despite strong demand from both manufacturing and speculation, there are some concerns over China's monetary policy tightening and Europe's sovereign debt problem, Luckchai said.
"China could raise its interest rates further and Europe's a problem. These could affect consumption of natural rubber," he said.
The baht is not likely to fluctuate much this year like it did in 2010 and rubber exporters could handle the baht's movement through hedging.
"What we're afraid of is the substitutes for natural rubber coming in the next few years. Earlier, it wasn't worth doing research and development, but now it is due to the high prices of natural rubber," he said.
Demand for both natural and synthetic rubber is likely to expand at a strong pace, but the division of the market slightly changed in Thailand. Synthetic rubber held about 58 per cent of demand and natural rubber held the remaining 42 per cent in 2009. Now, synthetic rubber is likely to hold more at 60 per cent, while natural rubber is expected to hold less at 40 per cent.
The price differential between natural and synthetic rubber is about Bt50 per kilogram. The synthetic rubber price has been rising in tandem with natural rubber from about Bt60 per kilogram to more than Bt100 now.
How operators - like the manufacturers of tyres, rubber gloves and other rubber products - respond to their rising rubber costs is another concern, he said. They should monitor the rubber situation more closely, and be aware of more price fluctuations and higher material costs, he added.
Rubber production fall may lead to further price increase
KOCHI: Bucking the market trend, rubber prices were up nearly 40% in the current peak production season that started in October and ends this week.
With the production set to enter a lean period from February, the prices are likely to remain bullish in the coming months. “The price rise in the peak production season is likely to leave the industry with very limited options,” says Rajiv Budhraja, director general of Automotive Tyre Manufacturers Association (ATMA).
“Both the price and availability will be an issue in the coming days,” he said, adding that the industry will have to think in terms of curtailment of production if such a situation arise. Natural rubber prices saw a major jump in the domestic market during the past few months from Rs 169 per kg on October 1 to Rs 235 per kg as on Monday.
The prices are likely to see a further rise in the coming weeks as the production enters a lean phase. The overall production in the current fiscal year is likely to be slightly higher than last year’s level. During the April-December period, the production was higher 2.8% compared to the same period last year.
“In October and November, the production was lower than last year’s level while in December and January it would be higher,” said a Rubber Board official. Still, the prices have remained bullish mainly because of the rise in international prices, which saw a 65% jump from Rs 161.65 per kg in October 1 to Rs 266.61 on Monday.
N Radhakrishnan, president of Cochin Rubber Merchants Association, attributes the price rise to the surge in international prices and withholding of stocks by growers. “Moreover, productivity of the domestic rubber plantations has come down as 30% of the area is overdue for replanting,” he said.
The domestic rubber production saw a slight dip in October and November due to unseasonal rains in the main centres of production in Kerala. However, the climatic changes had a much bigger impact on the international market as the production remained depressed in Thailand, Indonesia and Malaysia due to adverse weather patterns. Latest reports say that nearly 16,000 hectares in Thailand have been destroyed due to strong winds.
The shortage and price rise in the international market have left the industry with limited options. “We have to think of keeping ‘strategic reserves’ of rubber as it is a key resource like oil,” added Budhraja.
Ivorian rubber output seen up 5 pct in 2011
ABIDJAN (Reuters) - Rubber output from Africa's top supplier Ivory Coast will rise 5 percent this year to 238,000 tonnes as high prices tempt farmers to plant more acreage despite a political crisis, a top industry official said.
The country produced 227,000 tonnes in 2010, up more than 10 percent from the previous year and beating initial forecasts of 218,000 tonnes, said Akpangi Attobra, general secretary of the Ivorian natural rubber association, APROMAC.
"As a result of high prices and programs like seed grants, we are registering lots of new rubber tree land every year," he said in an interview with Reuters on Tuesday, explaining the new 2011 rubber production forecast.
He said a post-election standoff in the country had triggered a refugee outflow from Ivory Coast's southern rubber regions that had tightened the labour market for area plantations and complicated transport.
But he said the political problems would not prevent production from rising.
Agricultural analysts have said Ivory Coast's rubber sector is benefitting from low profit margins in its cocoa industry -- the world's largest -- which has tempted farmers to seek crops that can provide more stable returns.
Attobra said China, India and Malaysia were major buyers of Ivorian rubber last season and were offering farmers long-term supply contracts and aid to processing plants.
"They are pushing hard," he said.
He said 126,000 hectares of land were producing rubber and that the state was seeking to renew 300,000 hectares of existing plantations and plant another 300,000 hectares by 2018.
Ivory Coast rubber exports totalled 246,996 tonnes in 2010 -- a figure that included some rubber produced in neighbouring Liberia and trucked to Ivory Coast for shipment from the ports of Abidjan and San Pedro.
Rubber Drops Most in Two Months as High Prices May Boost Output
Jan. 26 (Bloomberg) -- Rubber slumped by the most in more than two months on speculation that record prices are spurring producers to increase output and as China may take additional steps to curb inflation, curbing demand.
The June-delivery contract dropped as much as 4.9 percent to 453.1 yen a kilogram ($5,519 a metric ton) on the Tokyo Commodity Exchange, the most since Nov. 12. The July-delivery contract, listed on the bourse today, traded at 452.4 yen after opening at 460.2 yen.
Futures extended declines from a record of 484.9 yen reached on Jan. 24. Rubber supply may expand 4.8 percent this year as planting area increases and high prices prompt farmers to continue tapping into the low-production season, boosting supply in February, according to the Association of Natural Rubber Producing Countries. China, the world’s largest consumer, may raise interest rates before the Lunar New Year holiday, said Hisaaki Tasaka, an analyst at ACE Koeki Co. in Tokyo.
“Concern about China’s rate increase dragged the market down,” Tasaka said by phone today. “Investors with long positions are eager to take profits before the Chinese New Year holiday starts next week.” The week-long holiday starts Feb. 2.
The January-delivery contract on the Tokyo exchange expired yesterday at 478.2 yen a kilogram, the highest-ever price, the bourse said in a statement. At its expiry, 1,570 tons of physical rubber was delivered, it said.
“The volume of delivery was more than I had expected,” Tasaka said. “Supply may not be so tight.”
Tapping Continues
Rubber production by members of the Association of Natural Rubber Producing Countries may total about 9.9 million tons this year, the group said in a monthly bulletin yesterday. The countries represent 92 percent of global supply.
Supply in February from the group members could be above average as higher prices motivate farmers to continue tapping until the end of February, it said. Growers typically reduce tapping during the leaf-shedding season that begins next month.
Output in January is expected to rise 2.9 percent to 866,000 tons, slower than 13.5 percent growth in the same period last year, the group said.
Production in Thailand, the world’s largest supplier, may rise 5.4 percent to 3.25 million tons this year, the association said, citing a government target. Indonesia is expected to produce 3.08 million tons, an 8.1 percent increase. Output from Malaysia may grow 8.2 percent to 1.05 million tons, the report said, citing government targets.
Chinese Demand
Rubber in Tokyo has gained 9.9 percent this month, extending last year’s 50 percent rally, as rising car sales led by China and India boost the demand outlook. China’s vehicle sales may grow 10 percent to 15 percent this year after jumping 32 percent to 18.06 million vehicles in 2010, according to a forecast by the China Association of Automobile Manufacturers.
In Shanghai, the May-delivery contract dropped as much as 3.2 percent to 38,410 yuan ($5,831) a ton, the lowest level in a week. It was at 38,600 yuan at the 11:30 a.m. local time break.
The cash price in Thailand dropped to 178.05 baht ($5.77) a kilogram, the Rubber Research Institute of Thailand said on its website today. The price climbed to a record 181.55 baht yesterday as some plantation areas in northeastern provinces of the country have already entered the low-output season, according to the institute.
Tokyo Futures Fall, Broader Commodities Weakness Weighs
Key Tokyo rubber futures extended losses for a second day on Wednesday (January 26), with caution about the recent rapid pace in price rises and broad weakness in commodities markets a day earlier encouraging profit-taking.
The newly listed July contract, which became the benchmark rubber contract on the Tokyo Commodity Exchange when it began trading on Wednesday, stood at 463.1 yen per kg as of 0014 GMT.
The previous benchmark for June delivery fell 11.2 yen or 2.3 percent to 465.4 yen. The contract hit a record high of 484.9 yen on Monday (January 24).
Deliveries against the January rubber futures contract, which expired on Tuesday (January 25) at 478.2 yen, stood at 314 lots or 1,570 tonnes, more than doubling from December's deliveries.
The most active Shanghai rubber contract for May delivery fell 800 yuan from Monday's close to settle at 39,665 yuan ($6,027) per tonne on Tuesday (January 25).
Oil prices edged up on Wednesday (January 25) after falling the previous day when a contraction in Britain's economy and India's interest rate hike to rein in inflation fueled concerns about economic growth and the effect of rising commodity costs.
The euro steadied on Wednesday (January 25) after climbing to a two-month high above $1.37 the day before and looked poised to extend gains as momentum turned increasingly bullish after the currency's recent break above key chart levels.
Japanese and Korean automakers are expected to post divergent quarterly results, with Hyundai Motor continuing its sales-led profit growth and Toyota, Nissan and Honda being pounded by a firmer yen.
Global natural rubber (NR) supplies in January 2011 are estimated to rise 2.9 percent as farmers raised tapping after prices rallied to record highs, the group responsible for 92 percent of global output, said.
Rubber output from Africa's top supplier Ivory Coast will rise 5 percent this year to 238,000 tonnes as high prices tempt farmers to plant more acreage despite a political crisis, a top industry official said.
Natural rubber could be the ultimate bubble if its price keeps rallying at current rates, the Thai Rubber Association warned last week.
"Demand for rubber is now stronger than gold," said Luckchai Kittipol, the association's president.
Last year, the price of natural rubber rose about 80 per cent with an average of Bt106 per kilogram (US$3,600 a tonne) and, in the first two weeks of this year, shot up more than 40 per cent. The cash price last Friday reached a record of Bt175.3 per kilogram due to supply shortages and rising demand from the automobile industry, according to the Rubber Research Institute of Thailand.
"Rubber prices have been rising sharply since late last year and are higher than expected now. This raises concerns that if the prices rise further, problems will emerge. Our rubber growers will suffer later [if the prices fluctuate]," Luckchai said.
It is difficult to say what a reasonable price should be now when there is speculation and less supply in the market, but the price should not be higher than Bt150 per kilogram, he said.
Rubber growers need price stability rather than fluctuations, he said. Volatile prices easily cause problems when they peak and plunge dramatically if an asset is overpriced or speculators abruptly shift to more attractive assets.
Natural rubber prices have extended rallies since late last year due to the heavy rainfall in top rubber-producing countries, including Thailand and India, the low production season, inventory taking by rubber growers and middlemen, and growing demand for rubber futures. Speculation by cross-border traders and global investors also triggered a spike in prices.
Last year, prices of commodities especially rubber and precious metals like gold and silver, surged due partly to the shift of global investors to seek higher-yielding assets elsewhere after the US dollar had been weakening.
China, the world's largest rubber consumer, uses about 3 million tonnes of natural rubber a year, while rubber futures trading reached almost 5 million tonnes in only a month.
"This isn't the real price. It's a bubble. This situation is expected to continue until there's confidence that rubber will be sufficient or its prices are too high," he said.
The May-delivery contract in Shanghai gained 2.1 per cent to 40,985 yuan ($6,224) a tonne last Friday, according to Bloomberg.
The global demand for natural rubber is expected to be unchanged from last year at 10.3 million tonnes, while supply could be slightly higher at 10.4 million tonnes this year.
Most thought that natural rubber was in short supply but actually it was kept in inventories, Luckchai said. The global inventories amount to 1.5 million-1.6 million tonnes, while Thailand keeps about 400,000-500,000 tonnes in stock.
"Thailand has been slowing down natural rubber sales, while China is speeding up purchases to keep it in factories," he said. This situation could drive up natural rubber prices.
Thailand, Indonesia and Malaysia account for about 94 per cent of the global production of natural rubber. India is another big producer and the fourth largest consumer. Thailand is expected to produce 3.3 million tonnes of natural rubber this year, of which about 2.8 million tonnes could be exported. Last year, the country's export volume declined by 0.2 per cent to 2.73 million tonnes, while its value soared 83.4 per cent to $7.89 billion.
China, the United States and Japan dominate global rubber consumption, boosted by strong growth in motor-vehicle production and manufacturing. China is estimated to consume 3.5 million tonnes of natural rubber in 2011, followed by the US with 900,000-1.1 million tonnes.
However, declining stockpiles in China may help cool down the shooting prices of the plantation commodity. Natural rubber inventories in China declined for a second week, losing 3,143 tonnes to 65,532 tonnes, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange was quoted by Bloomberg as saying. That is 57 per cent lower than last year's peak of 151,832 tonnes.
Despite strong demand from both manufacturing and speculation, there are some concerns over China's monetary policy tightening and Europe's sovereign debt problem, Luckchai said.
"China could raise its interest rates further and Europe's a problem. These could affect consumption of natural rubber," he said.
The baht is not likely to fluctuate much this year like it did in 2010 and rubber exporters could handle the baht's movement through hedging.
"What we're afraid of is the substitutes for natural rubber coming in the next few years. Earlier, it wasn't worth doing research and development, but now it is due to the high prices of natural rubber," he said.
Demand for both natural and synthetic rubber is likely to expand at a strong pace, but the division of the market slightly changed in Thailand. Synthetic rubber held about 58 per cent of demand and natural rubber held the remaining 42 per cent in 2009. Now, synthetic rubber is likely to hold more at 60 per cent, while natural rubber is expected to hold less at 40 per cent.
The price differential between natural and synthetic rubber is about Bt50 per kilogram. The synthetic rubber price has been rising in tandem with natural rubber from about Bt60 per kilogram to more than Bt100 now.
How operators - like the manufacturers of tyres, rubber gloves and other rubber products - respond to their rising rubber costs is another concern, he said. They should monitor the rubber situation more closely, and be aware of more price fluctuations and higher material costs, he added.
Rubber production fall may lead to further price increase
KOCHI: Bucking the market trend, rubber prices were up nearly 40% in the current peak production season that started in October and ends this week.
With the production set to enter a lean period from February, the prices are likely to remain bullish in the coming months. “The price rise in the peak production season is likely to leave the industry with very limited options,” says Rajiv Budhraja, director general of Automotive Tyre Manufacturers Association (ATMA).
“Both the price and availability will be an issue in the coming days,” he said, adding that the industry will have to think in terms of curtailment of production if such a situation arise. Natural rubber prices saw a major jump in the domestic market during the past few months from Rs 169 per kg on October 1 to Rs 235 per kg as on Monday.
The prices are likely to see a further rise in the coming weeks as the production enters a lean phase. The overall production in the current fiscal year is likely to be slightly higher than last year’s level. During the April-December period, the production was higher 2.8% compared to the same period last year.
“In October and November, the production was lower than last year’s level while in December and January it would be higher,” said a Rubber Board official. Still, the prices have remained bullish mainly because of the rise in international prices, which saw a 65% jump from Rs 161.65 per kg in October 1 to Rs 266.61 on Monday.
N Radhakrishnan, president of Cochin Rubber Merchants Association, attributes the price rise to the surge in international prices and withholding of stocks by growers. “Moreover, productivity of the domestic rubber plantations has come down as 30% of the area is overdue for replanting,” he said.
The domestic rubber production saw a slight dip in October and November due to unseasonal rains in the main centres of production in Kerala. However, the climatic changes had a much bigger impact on the international market as the production remained depressed in Thailand, Indonesia and Malaysia due to adverse weather patterns. Latest reports say that nearly 16,000 hectares in Thailand have been destroyed due to strong winds.
The shortage and price rise in the international market have left the industry with limited options. “We have to think of keeping ‘strategic reserves’ of rubber as it is a key resource like oil,” added Budhraja.
Ivorian rubber output seen up 5 pct in 2011
ABIDJAN (Reuters) - Rubber output from Africa's top supplier Ivory Coast will rise 5 percent this year to 238,000 tonnes as high prices tempt farmers to plant more acreage despite a political crisis, a top industry official said.
The country produced 227,000 tonnes in 2010, up more than 10 percent from the previous year and beating initial forecasts of 218,000 tonnes, said Akpangi Attobra, general secretary of the Ivorian natural rubber association, APROMAC.
"As a result of high prices and programs like seed grants, we are registering lots of new rubber tree land every year," he said in an interview with Reuters on Tuesday, explaining the new 2011 rubber production forecast.
He said a post-election standoff in the country had triggered a refugee outflow from Ivory Coast's southern rubber regions that had tightened the labour market for area plantations and complicated transport.
But he said the political problems would not prevent production from rising.
Agricultural analysts have said Ivory Coast's rubber sector is benefitting from low profit margins in its cocoa industry -- the world's largest -- which has tempted farmers to seek crops that can provide more stable returns.
Attobra said China, India and Malaysia were major buyers of Ivorian rubber last season and were offering farmers long-term supply contracts and aid to processing plants.
"They are pushing hard," he said.
He said 126,000 hectares of land were producing rubber and that the state was seeking to renew 300,000 hectares of existing plantations and plant another 300,000 hectares by 2018.
Ivory Coast rubber exports totalled 246,996 tonnes in 2010 -- a figure that included some rubber produced in neighbouring Liberia and trucked to Ivory Coast for shipment from the ports of Abidjan and San Pedro.
Rubber Drops Most in Two Months as High Prices May Boost Output
Jan. 26 (Bloomberg) -- Rubber slumped by the most in more than two months on speculation that record prices are spurring producers to increase output and as China may take additional steps to curb inflation, curbing demand.
The June-delivery contract dropped as much as 4.9 percent to 453.1 yen a kilogram ($5,519 a metric ton) on the Tokyo Commodity Exchange, the most since Nov. 12. The July-delivery contract, listed on the bourse today, traded at 452.4 yen after opening at 460.2 yen.
Futures extended declines from a record of 484.9 yen reached on Jan. 24. Rubber supply may expand 4.8 percent this year as planting area increases and high prices prompt farmers to continue tapping into the low-production season, boosting supply in February, according to the Association of Natural Rubber Producing Countries. China, the world’s largest consumer, may raise interest rates before the Lunar New Year holiday, said Hisaaki Tasaka, an analyst at ACE Koeki Co. in Tokyo.
“Concern about China’s rate increase dragged the market down,” Tasaka said by phone today. “Investors with long positions are eager to take profits before the Chinese New Year holiday starts next week.” The week-long holiday starts Feb. 2.
The January-delivery contract on the Tokyo exchange expired yesterday at 478.2 yen a kilogram, the highest-ever price, the bourse said in a statement. At its expiry, 1,570 tons of physical rubber was delivered, it said.
“The volume of delivery was more than I had expected,” Tasaka said. “Supply may not be so tight.”
Tapping Continues
Rubber production by members of the Association of Natural Rubber Producing Countries may total about 9.9 million tons this year, the group said in a monthly bulletin yesterday. The countries represent 92 percent of global supply.
Supply in February from the group members could be above average as higher prices motivate farmers to continue tapping until the end of February, it said. Growers typically reduce tapping during the leaf-shedding season that begins next month.
Output in January is expected to rise 2.9 percent to 866,000 tons, slower than 13.5 percent growth in the same period last year, the group said.
Production in Thailand, the world’s largest supplier, may rise 5.4 percent to 3.25 million tons this year, the association said, citing a government target. Indonesia is expected to produce 3.08 million tons, an 8.1 percent increase. Output from Malaysia may grow 8.2 percent to 1.05 million tons, the report said, citing government targets.
Chinese Demand
Rubber in Tokyo has gained 9.9 percent this month, extending last year’s 50 percent rally, as rising car sales led by China and India boost the demand outlook. China’s vehicle sales may grow 10 percent to 15 percent this year after jumping 32 percent to 18.06 million vehicles in 2010, according to a forecast by the China Association of Automobile Manufacturers.
In Shanghai, the May-delivery contract dropped as much as 3.2 percent to 38,410 yuan ($5,831) a ton, the lowest level in a week. It was at 38,600 yuan at the 11:30 a.m. local time break.
The cash price in Thailand dropped to 178.05 baht ($5.77) a kilogram, the Rubber Research Institute of Thailand said on its website today. The price climbed to a record 181.55 baht yesterday as some plantation areas in northeastern provinces of the country have already entered the low-output season, according to the institute.
Tokyo Futures Fall, Broader Commodities Weakness Weighs
Key Tokyo rubber futures extended losses for a second day on Wednesday (January 26), with caution about the recent rapid pace in price rises and broad weakness in commodities markets a day earlier encouraging profit-taking.
The newly listed July contract, which became the benchmark rubber contract on the Tokyo Commodity Exchange when it began trading on Wednesday, stood at 463.1 yen per kg as of 0014 GMT.
The previous benchmark for June delivery fell 11.2 yen or 2.3 percent to 465.4 yen. The contract hit a record high of 484.9 yen on Monday (January 24).
Deliveries against the January rubber futures contract, which expired on Tuesday (January 25) at 478.2 yen, stood at 314 lots or 1,570 tonnes, more than doubling from December's deliveries.
The most active Shanghai rubber contract for May delivery fell 800 yuan from Monday's close to settle at 39,665 yuan ($6,027) per tonne on Tuesday (January 25).
Oil prices edged up on Wednesday (January 25) after falling the previous day when a contraction in Britain's economy and India's interest rate hike to rein in inflation fueled concerns about economic growth and the effect of rising commodity costs.
The euro steadied on Wednesday (January 25) after climbing to a two-month high above $1.37 the day before and looked poised to extend gains as momentum turned increasingly bullish after the currency's recent break above key chart levels.
Japanese and Korean automakers are expected to post divergent quarterly results, with Hyundai Motor continuing its sales-led profit growth and Toyota, Nissan and Honda being pounded by a firmer yen.
Global natural rubber (NR) supplies in January 2011 are estimated to rise 2.9 percent as farmers raised tapping after prices rallied to record highs, the group responsible for 92 percent of global output, said.
Rubber output from Africa's top supplier Ivory Coast will rise 5 percent this year to 238,000 tonnes as high prices tempt farmers to plant more acreage despite a political crisis, a top industry official said.
Wednesday, January 26, 2011
Spot rubber declines on global cues
Spot rubber declines on global cues
Kottayam, Jan. 25
The domestic rubber prices declined on Tuesday. In spot, the prices fell following the sharp losses on the NMCE. According to observers, the market remained under pressure as certain traders preferred to sell at higher levels fearing further slips in prices.
Global natural rubber (NR) supply in January 2011 is estimated to rise 2.9 per cent as farmers have enhanced tapping after prices rallied to record highs. “Encouraged by abnormally high NR prices, farmers harvested over-aged, low yielding trees,” the Association of Natural Rubber Producing Countries (ANRPC) said in its monthly statement.
According to traders, sheet rubber weakened to Rs 232.50 (235) a kg mainly on buyer resistance. The grade closed flat at Rs 235 a kg both at Kottayam and Kochi as quoted by the Rubber Board.
In futures, the February series declined to Rs 230.80 (235.64), March to Rs 236.67 (241.46), April to Rs 245.85 (249.51) and May to Rs 250 (254.94) a kg for RSS 4 on the National Multi Commodity Exchange (NMCE).
RSS 3 (spot) improved to Rs 269.31 (266.61) a kg at Bangkok. The January futures for the grade expired at ¥480 (Rs 266.48) a kg while the April futures improved to ¥482.3 (Rs 267.75) from ¥481.4 a kg during the day session but then declined to ¥474 (Rs 263.15) a kg in the night session on the Tokyo Commodity Exchange (TOCOM).
Spot rates were (Rs/kg): RSS-4: 232.50 (235); RSS-5: 222.50 (226); ungraded: 218 (220); ISNR 20: 225 (227) and latex 60 per cent: 153 (155).
Natural Rubber Output From Key Growers May Rise 4.8%
Natural-rubber supply may expand 4.8 percent this year as planting area increases and high prices prompt farmers to continue tapping into the low-production season, boosting supply in February, a producers’ group said.
Production from members, which represent 92 percent of global supply, may total about 9.9 million metric tons this year, the Association of Natural Rubber Producing Countries said in a monthly bulletin today. That is lower than an “optimistic target” by member governments of 7.7 percent growth to 10.2 million tons, it said.
“Natural-rubber supply is unlikely to increase beyond 4.8 percent during 2011” as some farmers will uproot old trees for replanting, the group said. “The present tightness in the market could be continued if demand grows faster than supply.”
Rubber futures in Tokyo have gained 13 percent this year, extending last year’s 50 percent rally as rising car sales led by China and India boost demand, while rains disrupted tapping in the key growing nations of Southeast Asia.
“Supply this year may not increase that much, as persistent rains have lowered production across Southeast Asian countries,” Umaporn Thepnuan, senior marketing official at Future Agri Trade Co., said by telephone from Bangkok. Supply concerns and strong demand will continue to support prices, Umaporn said.
Tapping Prolonged
Supply in February from members of the group could be above average as higher prices motivate farmers to continue tapping until the end of February, the group said. Growers typically reduce tapping during the leaf-shedding season that begins in next month.
Output in January is expected rise 2.9 percent to 866,000 tons, slower than 13.5 percent growth in the same period last year, it said.
Production in Thailand, the world’s largest supplier, may rise 5.4 percent to 3.25 million tons this year, the group said, citing a government target. Indonesia is expected to produce 3.08 million tons, an 8.1 percent increase. Output from Malaysia may grow 8.2 percent to 1.05 million tons it said, citing government targets.
Consumption from the group’s member countries is expected to rise this year. China, the largest user of natural rubber, may consume 3.6 million tons, 9 percent more than last year. India’s demand may gain 5.2 percent to 991,000 tons, it said.
China’s imports may rise 6.3 percent to 1.85 million tons, the group said. The country’s imports surged 28 percent in the fourth quarter, while they jumped 83 percent in India, it said.
China’s vehicle sales may grow 10 percent to 15 percent this year after jumping 32 percent to 18.06 million vehicles in 2010, according to a forecast by the China Association of Automobile Manufacturers.
Short supply to benefit rubber industry
HCM CITY — The national rubber industry is upbeat about export prospects in coming years, but experts are calling for a strategy to reduce over-reliance on a single market in the long run.
The Viet Nam Rubber Association (VRA) said total export turnover last year reached US$2.3 billion, surpassing the set target by $800 million.
Although rubber exports last year increased by only 5.7 per cent in volume, reaching 750,000 tonnes, it rose by roughly 90 per cent in value, according to the Ministry of Agriculture and Rural Development.
The country's total rubber output this year is estimated to reach about 780,000 tonnes, an increase of 30,000 tonnes over 2010, for a turnover of between $2.5 and $2.7 billion.
Last year saw latex prices soar dramatically, reaching $2,820 per tonne, a 230 per cent surge over 2009. The hike in export prices benefited many local rubber exporters, the VRA said.
The Tay Ninh Rubber Company, for instance, earned revenues of over VND806 billion ($40.3 million), with pre-tax profits of VND292 billion ($14.6 million), surpassing its target by 152 per cent.
Meanwhile, the Phuoc Hoa Rubber Company posted revenues of nearly VND2 trillion ($99.1 million), 90 per cent more than its annual target; and a 75 per cent increase in post-tax profits at VND471 billion ($23.5 million).
Experts attribute the increasing demand for rubber and higher prices to the global economic recovery, which has manufacturers of many products including tyres buying more of the raw material.
However, experts say that the supply of rubber will fall short of demand until at least the end of February this year since many large plantations in Thailand, Indonesia and Viet Nam are now in their low production season.
Current reserves maintained by China, a major consumer, are estimated at only 58,675 tonnes, a drop of 55 per cent compared to the same period last year.
China is Viet Nam's leading importer of latex, accounting for 70 per cent of its rubber export revenues.
But rubber exports are overly reliant now on China's import policies because large quantities are exported to the neighbouring country via border-trade or unofficial channels, said Tran Thi Thuy Hoa, general secretary of the VRA.
Hoa urged rubber businesses to increase the product quality and look for more markets instead of depending too much on the Chinese market.
Businesses should also export rubber to China via official channels, he said.
Of the total rubber cultivation area of 678,000 ha, 65 per cent has given latex so far, according to the VRA.
The high economic value of latex has attracted investments from many businesses in many localities.
The Sai Gon Construction Trading Company has developed a project to cultivate rubber on 20,000ha in central Quang Tri Province's Huong Hoa District. It aims to plant the trees on 1,500ha within this year.
The central province of Quang Binh has 13,000ha under rubber cultivation and plans to increase the figure to 26,000ha by 2015.
Experts have said that the expected increase in rubber output until 2020 would still be insufficient to meet demand, and the industry is expected to post higher earnings as a result.
Viet Nam, Thailand and Indonesia are among the major suppliers of latex to the international market. —VNS
Kottayam, Jan. 25
The domestic rubber prices declined on Tuesday. In spot, the prices fell following the sharp losses on the NMCE. According to observers, the market remained under pressure as certain traders preferred to sell at higher levels fearing further slips in prices.
Global natural rubber (NR) supply in January 2011 is estimated to rise 2.9 per cent as farmers have enhanced tapping after prices rallied to record highs. “Encouraged by abnormally high NR prices, farmers harvested over-aged, low yielding trees,” the Association of Natural Rubber Producing Countries (ANRPC) said in its monthly statement.
According to traders, sheet rubber weakened to Rs 232.50 (235) a kg mainly on buyer resistance. The grade closed flat at Rs 235 a kg both at Kottayam and Kochi as quoted by the Rubber Board.
In futures, the February series declined to Rs 230.80 (235.64), March to Rs 236.67 (241.46), April to Rs 245.85 (249.51) and May to Rs 250 (254.94) a kg for RSS 4 on the National Multi Commodity Exchange (NMCE).
RSS 3 (spot) improved to Rs 269.31 (266.61) a kg at Bangkok. The January futures for the grade expired at ¥480 (Rs 266.48) a kg while the April futures improved to ¥482.3 (Rs 267.75) from ¥481.4 a kg during the day session but then declined to ¥474 (Rs 263.15) a kg in the night session on the Tokyo Commodity Exchange (TOCOM).
Spot rates were (Rs/kg): RSS-4: 232.50 (235); RSS-5: 222.50 (226); ungraded: 218 (220); ISNR 20: 225 (227) and latex 60 per cent: 153 (155).
Natural Rubber Output From Key Growers May Rise 4.8%
Natural-rubber supply may expand 4.8 percent this year as planting area increases and high prices prompt farmers to continue tapping into the low-production season, boosting supply in February, a producers’ group said.
Production from members, which represent 92 percent of global supply, may total about 9.9 million metric tons this year, the Association of Natural Rubber Producing Countries said in a monthly bulletin today. That is lower than an “optimistic target” by member governments of 7.7 percent growth to 10.2 million tons, it said.
“Natural-rubber supply is unlikely to increase beyond 4.8 percent during 2011” as some farmers will uproot old trees for replanting, the group said. “The present tightness in the market could be continued if demand grows faster than supply.”
Rubber futures in Tokyo have gained 13 percent this year, extending last year’s 50 percent rally as rising car sales led by China and India boost demand, while rains disrupted tapping in the key growing nations of Southeast Asia.
“Supply this year may not increase that much, as persistent rains have lowered production across Southeast Asian countries,” Umaporn Thepnuan, senior marketing official at Future Agri Trade Co., said by telephone from Bangkok. Supply concerns and strong demand will continue to support prices, Umaporn said.
Tapping Prolonged
Supply in February from members of the group could be above average as higher prices motivate farmers to continue tapping until the end of February, the group said. Growers typically reduce tapping during the leaf-shedding season that begins in next month.
Output in January is expected rise 2.9 percent to 866,000 tons, slower than 13.5 percent growth in the same period last year, it said.
Production in Thailand, the world’s largest supplier, may rise 5.4 percent to 3.25 million tons this year, the group said, citing a government target. Indonesia is expected to produce 3.08 million tons, an 8.1 percent increase. Output from Malaysia may grow 8.2 percent to 1.05 million tons it said, citing government targets.
Consumption from the group’s member countries is expected to rise this year. China, the largest user of natural rubber, may consume 3.6 million tons, 9 percent more than last year. India’s demand may gain 5.2 percent to 991,000 tons, it said.
China’s imports may rise 6.3 percent to 1.85 million tons, the group said. The country’s imports surged 28 percent in the fourth quarter, while they jumped 83 percent in India, it said.
China’s vehicle sales may grow 10 percent to 15 percent this year after jumping 32 percent to 18.06 million vehicles in 2010, according to a forecast by the China Association of Automobile Manufacturers.
Short supply to benefit rubber industry
HCM CITY — The national rubber industry is upbeat about export prospects in coming years, but experts are calling for a strategy to reduce over-reliance on a single market in the long run.
The Viet Nam Rubber Association (VRA) said total export turnover last year reached US$2.3 billion, surpassing the set target by $800 million.
Although rubber exports last year increased by only 5.7 per cent in volume, reaching 750,000 tonnes, it rose by roughly 90 per cent in value, according to the Ministry of Agriculture and Rural Development.
The country's total rubber output this year is estimated to reach about 780,000 tonnes, an increase of 30,000 tonnes over 2010, for a turnover of between $2.5 and $2.7 billion.
Last year saw latex prices soar dramatically, reaching $2,820 per tonne, a 230 per cent surge over 2009. The hike in export prices benefited many local rubber exporters, the VRA said.
The Tay Ninh Rubber Company, for instance, earned revenues of over VND806 billion ($40.3 million), with pre-tax profits of VND292 billion ($14.6 million), surpassing its target by 152 per cent.
Meanwhile, the Phuoc Hoa Rubber Company posted revenues of nearly VND2 trillion ($99.1 million), 90 per cent more than its annual target; and a 75 per cent increase in post-tax profits at VND471 billion ($23.5 million).
Experts attribute the increasing demand for rubber and higher prices to the global economic recovery, which has manufacturers of many products including tyres buying more of the raw material.
However, experts say that the supply of rubber will fall short of demand until at least the end of February this year since many large plantations in Thailand, Indonesia and Viet Nam are now in their low production season.
Current reserves maintained by China, a major consumer, are estimated at only 58,675 tonnes, a drop of 55 per cent compared to the same period last year.
China is Viet Nam's leading importer of latex, accounting for 70 per cent of its rubber export revenues.
But rubber exports are overly reliant now on China's import policies because large quantities are exported to the neighbouring country via border-trade or unofficial channels, said Tran Thi Thuy Hoa, general secretary of the VRA.
Hoa urged rubber businesses to increase the product quality and look for more markets instead of depending too much on the Chinese market.
Businesses should also export rubber to China via official channels, he said.
Of the total rubber cultivation area of 678,000 ha, 65 per cent has given latex so far, according to the VRA.
The high economic value of latex has attracted investments from many businesses in many localities.
The Sai Gon Construction Trading Company has developed a project to cultivate rubber on 20,000ha in central Quang Tri Province's Huong Hoa District. It aims to plant the trees on 1,500ha within this year.
The central province of Quang Binh has 13,000ha under rubber cultivation and plans to increase the figure to 26,000ha by 2015.
Experts have said that the expected increase in rubber output until 2020 would still be insufficient to meet demand, and the industry is expected to post higher earnings as a result.
Viet Nam, Thailand and Indonesia are among the major suppliers of latex to the international market. —VNS
Tuesday, January 25, 2011
Mixed trend in rubber
Mixed trend in rubber
Kottayam, Jan. 24
Spot rubber showed a mixed trend on Monday. The market failed to react in tune with the global gains on buyer resistance. Though the sentiments were partially affected by a weak closing on the NMCE, certain grades ruled firm with marginal gains on comparatively better demand.
The argument about globalisation was that the farmers in India would get the same benefits as their counterparts in other countries. Now when the price goes up in favour of farmers, how could it be denied to them, asked Mr Joy Nadukkara, Ex. MP and President, Meenachil Rubber Marketing and Processing Cooperative Society Ltd.
The price in the international market still remains about Rs 25 a kg above the domestic price. It is true that higher the prices, more are the reverses which would harm the industry in the long run. But attempts to deny higher prices to the farmers could not be justified under any circumstances, he said.
Sheet rubber closed flat at Rs 235 a kg according to traders. The grade firmed up to Rs 235 (234) a kg both at Kottayam and Kochi as per Rubber Board. RSS 4 declined at its February series to Rs 235.05 (239.21), March to Rs 241.21 (245.29), April to Rs 249.11 (253.24) and May to Rs 254.70 (259.52) a kg on the National Multi Commodity Exchange (NMCE).
RSS 3 (spot) improved to Rs 266.61 (261.87) a kg at Bangkok. The January futures for the grade moved up to ¥483.2 (Rs 266.06) from ¥476.5 a kg during the day session and then to ¥484 (Rs 266.58) in the night session on the Tokyo Commodity Exchange (TOCOM). Spot rates were (Rs/kg): RSS-4: 235 (235); RSS-5: 226 (225); ungraded: 220 (220); ISNR 20: 227 (226) and latex 60 per cent: 155 (155).
Rubber Supply Stretched Tight
The booming global automobile sector - especially in countries such as China and India - has accelerated demand for tyres. But the world's natural rubber supply is likely to remain tight for the next two years due to a lower yield from major producing countries such as Thailand.
The Association of Natural Rubber Producing Countries (ANRPC) estimated natural rubber supply increased by 6.3% to touch 9.4 million tonnes during 2010, but expects a drop in production from Thailand this year due to an extended winter and unpredictable rains. Production in Indonesia also dropped for this harvest due to unusual rains.
Still, the global rubber supply in 2011 is expected to equal last year's total due to the chance of increased output in many major growing countries, said Jom Jacob, senior economist at the ANRPC.
Thailand is planning to reduce its rubber plantations by 815,000 hectares in the South to grow oil palm trees. It will expand rubber plantations in the North and Northeast by 870,000 hectares. A shift in the supply curve is expected from 2012 due to the new planting areas reaching the yielding stage, said Mr Jacob.
He expects the impact of supply from such a large area to be partly offset by uprooting of old rubber trees in all major producing countries.
Labour availability and climate are the two main risk factors for rubber supply. Delay in replanting due to current high prices and crop expansion in non-traditional areas where yield will be lower are factors to watch out for in the near future, said ANRPC secretary-general Djoko S. Damardjati.
Inappropriate planning for synthetic rubber production is also making the situation tight, said Stephen Evans, the secretary-general of the International Rubber Study Group (IRSG). Globally, a shortfall is being reported in the production of butadiene, an important industrial chemical used as a monomer in the production of synthetic rubber.
India imports more than 80% of its synthetic rubber. The Rubber Board of India reported the share of natural rubber in automobile tyres is 73% and synthetic only 27%. Globally, synthetic rubber averages 56% composition in tyres against 44% natural rubber.
The IRSG said during 2010, natural rubber demand stood at 10.3 million tonnes while synthetic was 13.6 million tonnes. Rising crude oil prices have been a major factor in the production and consumption of synthetic rubber as it is mostly produced from the cracking of feedstock naphtha.
"Indian synthetic rubber production is non-existent, unlike China that has strategically built up huge capacities. In the past five years, India has only added 0.5 million tonnes of synthetic rubber production capacity," said Mr Evans.
India's monthly production of synthetic rubber totals around 8,000 to 9,000 tonnes against demand of 30,000 to 33,000 tonnes. "Based on the recent market experience of petrochemical cracker diets going light, butadiene supply will be constrained," he added.
The quantity of butadiene produced depends on the hydrocarbons used as feed. "The discovery of cheaper natural gas like shale gas in the United States has led to less production of butadiene as a byproduct. Most plants in the United States are flexible enough to switch quickly," said Mr Evans.
The supply of butadiene in the United States has been light the last two years. Europe, Canada and China are also trying the new cheaper and abundant shale gas. More countries adapting to the new feedstock will mean less butadiene.
India's natural rubber production ranking is being challenged by Vietnam. India's share as a percentage of total planted area of the ANRPC has remained almost the same from 2005 (7.5%) to 2009 (7.8%).
IRSG officials estimate rubber demand in 2010 to touch 23.9 million tonnes, growth of 12.9% over the previous year. In 2011, demand is estimated at 25.5 million tonnes with growth of 6.7%.
India's automotive market gained momentum the past two years as the country rode strong economic growth despite a global slump. Rising disposable incomes, easier access to consumer credit, plenty of product action and some aggressive discounting by manufacturers have jumpstarted car sales.
The Society of Indian Automobile Manufacturers said 12.29 million vehicles were sold from April 2009 to March 2010. This included passenger vehicles, commercial vehicles, three-wheelers and two-wheelers.
China's tyre industry is also finding it hard to cope with higher rubber prices.
The Global Times, a subsidiary of the People's Daily, quoted Deng Yali, vice-chairman of China Rubber Industry Association, as saying rubber prices rose more than 80% in 2010, cutting into manufacturer profits. The report also states China uses one-third of the 9 million tonnes of rubber used worldwide on a yearly basis.
Chinese consumer tyre exports to the United States totalled 31.1 million units in 2010, down from 43 million in 2009, according to reports.
Malaysia to Cut Middlemen Out of Rubber Trade
The government of Malaysia plans to increase profits for rubber small holders by implementing various initiatives, including reducing the role of the middleman.
Rural and Regional Development Minister Datuk Seri Shafie Apdal said with the current price of rubber at RM16.29 per kilo, small holdings could only take in half the amount as they depended on middlemen.
He said the ministry also plans to establish factories to process rubber in holdings that are 5,000ha or bigger.
Shafie said this after presenting aid to repair old houses in Kampung Lembah Bakti here yesterday (January 23).
On another matter, Shafie said the ministry had spent RM431.6mil in repairing and building more than 16,000 houses in rural areas nationwide last year under the House Assistance Programme (PBR).
He said the government has allocated RM300mil to help 9,146 families this year in repairing their houses.
La Niña is a danger to the economic recovery
The increasing price of commodities is causing input costs all over the world to rise and there's a real danger this could derail the tentativeeconomic recovery in the west.
Worse still, it could cripple emerging markets that are now the world's engine of growth. And a lot of it is down to the action of a "little girl".
The La Ni̱a weather phenomenon Рlittle girl in Spanish Рis causing havoc all over the world as it destroys crops and floods mines. It has already hit the price of coal, rubber, soybeans, palm oil and wheat Рand the phenomenon is expected to last until at least April.
La Ni̱a is a weather event that sees surface waters in the central and eastern Pacific Ocean cool. This brings heavy rainfall to places such as Australia, Indonesia, Brazil and Colombia Рand causes dryness in California and the southern US.
La Niña is a regular and predictable event. Unfortunately, this year it is much worse than normal.
"The solid record of La Niña strength only goes back about 50 years and this latest event appears to be one of the strongest ones over this time period," Bill Patzert, a climatologist at NASA's Jet Propulsion Laboratory in California said. Dr Rob Allan, a scientific manager at the Met Office, agrees. He even raises the prospect of a "double event".
"The average lifecycle of La Ni̱a indicated that there are a few months left to run Рbut it is not unknown that it can carry on for much longer." However, current models suggest that the weather system will weaken in the coming months.
The most high profile event hitting business has been the devastating floods in Queensland, Australia, which have washed away infrastructure and closed mines. They have resulted in A$2.3bn (£1.4bn) of lost coal sales for the mining industry, according to the Queensland Resources Council. This sent the spot price of coking coal soaring to as high as $370 a tonne, significantly higher than the first quarter contract price of $225.
This is bad news for steel makers, which were already suffering from a jump in the price of iron ore. Steel prices have been forecast to rise and steel groups had been hoping to see an increase in margins this year. The floods may have put paid to that.
BHP Billiton has said that its coal production slumped by 30pc in the final quarter of last year, although stockpiles across its supply chain meant that sales were only hit by 15pc.
Perhaps the most worrying aspect for chief executives of mining companies is the prospect of emergency taxation to bolster reconstruction efforts in Australia. Most miners have seen their cashflows boosted significantly by rising commodity prices and they successfully battled plans for a new supertax on mining profits in Australia last year. If a new reconstruction tax is introduced, it is likely the government will win that battle as it will have the moral high ground.
But it is not just miners that could see their finances hurt by La Ni̱a weather patterns. The weather has hit agriculture hard in Asia Рand prices of products used in manufacturing such as rubber and palm oil have been on the rise.
On Friday, rubber futures hit an all-time high after La Niña floods in Thailand caused a shortage. Thailand is the world's largest exporter of rubber, which is used in a wide variety of manufacturing processes. Demand for rubber from China and India's carmakers has been particularly strong. The weather in the southern rubber-producing states is expected to worsen.
Rains in Brazil have hit crop production – and even the price of fruit is expected to soar in the country, which is battling significant inflation. In Sao Paulo, lettuce, broccoli, watercress and cauliflower production have reportedly fallen by 20pc, prompting a 60pc rise in vegetable prices.
Inflation is a real threat to the global economy and concerns are mounting that central banks may have to increase rates earlier than they wanted – putting the recovery at risk.
This little girl could have a very big impact over the next few months. GW
Ivory Coast worries drive cocoa to five-month high
Cocoa prices are expected to surge today after the Ivory Coast’s president-elect, Alassane Ouattara, imposed an export ban on the commodity.
The price last week rose almost 8pc to $2,150 (£1,340) per tonne in London – a five-month high – on concerns about political unrest in the country, the world’s largest grower of beans.
There has been turmoil in the West African country since a disputed election in late November, but the supply of cocoa has not yet been affected. However, traders will now be expecting a jump in the cocoa price after Mr Ouattara, the internationally recognised winner of the elections, sent a letter to leading cocoa exporters yesterday ordering them to stop overseas shipments until February 23 in an attempt to oust incumbent Laurent Gbagbo.
According to forecasts by Macquarie, Ivory Coast’s harvests will be up 1.9pc from last year, so the market was expecting to be well supplied.
Traders had said there were no fundamental cocoa supply problems and believed a rush of fund buying had boosted the price.
Now, any reduction in supply is likely to push the price towards a 33-year high, since the Ivory Coast accounts for about 40pc of global cocoa exports.
Exports could stop today and all eyes will be on attempts by industry bodies to coordinate traders’ efforts. RM
Oil slides lower
Amid a general correction in the commodities market, Brent crude oil slipped as low as $95.5 per barrel at one point last week, having hovered nearer the $100 per barrel mark for the last few weeks.
In America, West Texan Intermediary dropped as low as $88, with the spread between the two widening.
Inventories of oil are rising across the US and it appears that worries about the dollar are the main driver supporting crude at its current price
Rubber supply stretched tight
The booming global automobile sector - especially in countries such as China and India - has accelerated demand for tyres. But the world's natural rubber supply is likely to remain tight for the next two years due to a lower yield from major producing countries such as Thailand.
The Association of Natural Rubber Producing Countries (ANRPC) estimated natural rubber supply increased by 6.3% to touch 9.4 million tonnes during 2010, but expects a drop in production from Thailand this year due to an extended winter and unpredictable rains. Production in Indonesia also dropped for this harvest due to unusual rains.
Still, the global rubber supply in 2011 is expected to equal last year's total due to the chance of increased output in many major growing countries, said Jom Jacob, senior economist at the ANRPC.
Thailand is planning to reduce its rubber plantations by 815,000 hectares in the South to grow oil palm trees. It will expand rubber plantations in the North and Northeast by 870,000 hectares. A shift in the supply curve is expected from 2012 due to the new planting areas reaching the yielding stage, said Mr Jacob.
He expects the impact of supply from such a large area to be partly offset by uprooting of old rubber trees in all major producing countries.
Labour availability and climate are the two main risk factors for rubber supply. Delay in replanting due to current high prices and crop expansion in non-traditional areas where yield will be lower are factors to watch out for in the near future, said ANRPC secretary-general Djoko S. Damardjati.
Inappropriate planning for synthetic rubber production is also making the situation tight, said Stephen Evans, the secretary-general of the International Rubber Study Group (IRSG). Globally, a shortfall is being reported in the production of butadiene, an important industrial chemical used as a monomer in the production of synthetic rubber.
India imports more than 80% of its synthetic rubber. The Rubber Board of India reported the share of natural rubber in automobile tyres is 73% and synthetic only 27%. Globally, synthetic rubber averages 56% composition in tyres against 44% natural rubber.
The IRSG said during 2010, natural rubber demand stood at 10.3 million tonnes while synthetic was 13.6 million tonnes. Rising crude oil prices have been a major factor in the production and consumption of synthetic rubber as it is mostly produced from the cracking of feedstock naphtha.
"Indian synthetic rubber production is non-existent, unlike China that has strategically built up huge capacities. In the past five years, India has only added 0.5 million tonnes of synthetic rubber production capacity," said Mr Evans.
India's monthly production of synthetic rubber totals around 8,000 to 9,000 tonnes against demand of 30,000 to 33,000 tonnes. "Based on the recent market experience of petrochemical cracker diets going light, butadiene supply will be constrained," he added.
The quantity of butadiene produced depends on the hydrocarbons used as feed. "The discovery of cheaper natural gas like shale gas in the United States has led to less production of butadiene as a byproduct. Most plants in the United States are flexible enough to switch quickly," said Mr Evans.
The supply of butadiene in the United States has been light the last two years. Europe, Canada and China are also trying the new cheaper and abundant shale gas. More countries adapting to the new feedstock will mean less butadiene.
India's natural rubber production ranking is being challenged by Vietnam. India's share as a percentage of total planted area of the ANRPC has remained almost the same from 2005 (7.5%) to 2009 (7.8%).
IRSG officials estimate rubber demand in 2010 to touch 23.9 million tonnes, growth of 12.9% over the previous year. In 2011, demand is estimated at 25.5 million tonnes with growth of 6.7%.
India's automotive market gained momentum the past two years as the country rode strong economic growth despite a global slump. Rising disposable incomes, easier access to consumer credit, plenty of product action and some aggressive discounting by manufacturers have jumpstarted car sales.
The Society of Indian Automobile Manufacturers said 12.29 million vehicles were sold from April 2009 to March 2010. This included passenger vehicles, commercial vehicles, three-wheelers and two-wheelers.
China's tyre industry is also finding it hard to cope with higher rubber prices.
The Global Times, a subsidiary of the People's Daily, quoted Deng Yali, vice-chairman of China Rubber Industry Association, as saying rubber prices rose more than 80% in 2010, cutting into manufacturer profits. The report also states China uses one-third of the 9 million tonnes of rubber used worldwide on a yearly basis.
Chinese consumer tyre exports to the United States totalled 31.1 million units in 2010, down from 43 million in 2009, according to reports.
Rubber Board to approach Maharashtra for GM rubber field trials
The Rubber Board plans to soon approach the Maharashtra Government to hold field trials of genetically-modified (GM) rubber.
“The Kerala Government is in-principle opposed to GM crops. Therefore, we plan to approach the Maharashtra Government, to allocate a plot for us for planting GM rubber,” said Mr Toms Joseph, Deputy Director (Economic Research) of the Rubber Board. The Kerala Agriculture Minister, Mr Mullakara Ratnakaran, a couple of months back wrote a letter to the Union Environment and Forests Minister, Mr Jairam Ramesh, opposing the clearance given by the Genetic Engineering Appraisal Committee (GEAC) for field trials.
His opposition was on the grounds that it would have an adverse effect on the ecosystem.
In his reply, Mr Ramesh said that without field trials, it would not be possible to ascertain any adverse effects to the ecosystem from GM rubber.
The Rubber Board has been given the go-ahead to hold field trials by the GEAC.
“We have been told that the permission has been given and we are waiting for the letter,” said Mr Joseph on the sidelines of the India Rubber Expo 2011.
The GM rubber plant, in which MnSOD gene, taken from rubber tree itself has been incorporated, is resistant to drought and stress.
Suitable place
It can withstand higher temperatures and can be introduced in Maharashtra where the temperature is higher than in Kerala that accounts for over 95 per cent of natural rubber grown in the country.
“The yield and other characteristics will be clear during the field trial,” Mr Joseph said. The development of GM rubber is significant in the wake of weather change affecting rubber production.
During the current fiscal, rubber production was estimated to increase to 8.93 lakh tonnes (lt) from 8.31 lt last year.
However, with weather playing truant during September-October, it has been pruned to 8.51 lt.
Ministry to cut middlemen out of rubber trade
LABIS: The government plans to increase profits for rubber small holders by implementing various initiatives, including reducing the role of the middleman.
Rural and Regional Development Minister Datuk Seri Shafie Apdal said with the current price of rubber at RM16.29 per kilo, small holdings could only take in half the amount as they depended on middlemen.
He said the ministry also plans to establish factories to process rubber in holdings that are 5,000ha or bigger.
Shafie said this after presenting aid to repair old houses in Kampung Lembah Bakti here yesterday.
On another matter, Shafie said the ministry had spent RM431.6mil in repairing and building more than 16,000 houses in rural areas nationwide last year under the House Assistance Programme (PBR).
He said the government has allocated RM300mil to help 9,146 families this year in repairing their houses.
Kottayam, Jan. 24
Spot rubber showed a mixed trend on Monday. The market failed to react in tune with the global gains on buyer resistance. Though the sentiments were partially affected by a weak closing on the NMCE, certain grades ruled firm with marginal gains on comparatively better demand.
The argument about globalisation was that the farmers in India would get the same benefits as their counterparts in other countries. Now when the price goes up in favour of farmers, how could it be denied to them, asked Mr Joy Nadukkara, Ex. MP and President, Meenachil Rubber Marketing and Processing Cooperative Society Ltd.
The price in the international market still remains about Rs 25 a kg above the domestic price. It is true that higher the prices, more are the reverses which would harm the industry in the long run. But attempts to deny higher prices to the farmers could not be justified under any circumstances, he said.
Sheet rubber closed flat at Rs 235 a kg according to traders. The grade firmed up to Rs 235 (234) a kg both at Kottayam and Kochi as per Rubber Board. RSS 4 declined at its February series to Rs 235.05 (239.21), March to Rs 241.21 (245.29), April to Rs 249.11 (253.24) and May to Rs 254.70 (259.52) a kg on the National Multi Commodity Exchange (NMCE).
RSS 3 (spot) improved to Rs 266.61 (261.87) a kg at Bangkok. The January futures for the grade moved up to ¥483.2 (Rs 266.06) from ¥476.5 a kg during the day session and then to ¥484 (Rs 266.58) in the night session on the Tokyo Commodity Exchange (TOCOM). Spot rates were (Rs/kg): RSS-4: 235 (235); RSS-5: 226 (225); ungraded: 220 (220); ISNR 20: 227 (226) and latex 60 per cent: 155 (155).
Rubber Supply Stretched Tight
The booming global automobile sector - especially in countries such as China and India - has accelerated demand for tyres. But the world's natural rubber supply is likely to remain tight for the next two years due to a lower yield from major producing countries such as Thailand.
The Association of Natural Rubber Producing Countries (ANRPC) estimated natural rubber supply increased by 6.3% to touch 9.4 million tonnes during 2010, but expects a drop in production from Thailand this year due to an extended winter and unpredictable rains. Production in Indonesia also dropped for this harvest due to unusual rains.
Still, the global rubber supply in 2011 is expected to equal last year's total due to the chance of increased output in many major growing countries, said Jom Jacob, senior economist at the ANRPC.
Thailand is planning to reduce its rubber plantations by 815,000 hectares in the South to grow oil palm trees. It will expand rubber plantations in the North and Northeast by 870,000 hectares. A shift in the supply curve is expected from 2012 due to the new planting areas reaching the yielding stage, said Mr Jacob.
He expects the impact of supply from such a large area to be partly offset by uprooting of old rubber trees in all major producing countries.
Labour availability and climate are the two main risk factors for rubber supply. Delay in replanting due to current high prices and crop expansion in non-traditional areas where yield will be lower are factors to watch out for in the near future, said ANRPC secretary-general Djoko S. Damardjati.
Inappropriate planning for synthetic rubber production is also making the situation tight, said Stephen Evans, the secretary-general of the International Rubber Study Group (IRSG). Globally, a shortfall is being reported in the production of butadiene, an important industrial chemical used as a monomer in the production of synthetic rubber.
India imports more than 80% of its synthetic rubber. The Rubber Board of India reported the share of natural rubber in automobile tyres is 73% and synthetic only 27%. Globally, synthetic rubber averages 56% composition in tyres against 44% natural rubber.
The IRSG said during 2010, natural rubber demand stood at 10.3 million tonnes while synthetic was 13.6 million tonnes. Rising crude oil prices have been a major factor in the production and consumption of synthetic rubber as it is mostly produced from the cracking of feedstock naphtha.
"Indian synthetic rubber production is non-existent, unlike China that has strategically built up huge capacities. In the past five years, India has only added 0.5 million tonnes of synthetic rubber production capacity," said Mr Evans.
India's monthly production of synthetic rubber totals around 8,000 to 9,000 tonnes against demand of 30,000 to 33,000 tonnes. "Based on the recent market experience of petrochemical cracker diets going light, butadiene supply will be constrained," he added.
The quantity of butadiene produced depends on the hydrocarbons used as feed. "The discovery of cheaper natural gas like shale gas in the United States has led to less production of butadiene as a byproduct. Most plants in the United States are flexible enough to switch quickly," said Mr Evans.
The supply of butadiene in the United States has been light the last two years. Europe, Canada and China are also trying the new cheaper and abundant shale gas. More countries adapting to the new feedstock will mean less butadiene.
India's natural rubber production ranking is being challenged by Vietnam. India's share as a percentage of total planted area of the ANRPC has remained almost the same from 2005 (7.5%) to 2009 (7.8%).
IRSG officials estimate rubber demand in 2010 to touch 23.9 million tonnes, growth of 12.9% over the previous year. In 2011, demand is estimated at 25.5 million tonnes with growth of 6.7%.
India's automotive market gained momentum the past two years as the country rode strong economic growth despite a global slump. Rising disposable incomes, easier access to consumer credit, plenty of product action and some aggressive discounting by manufacturers have jumpstarted car sales.
The Society of Indian Automobile Manufacturers said 12.29 million vehicles were sold from April 2009 to March 2010. This included passenger vehicles, commercial vehicles, three-wheelers and two-wheelers.
China's tyre industry is also finding it hard to cope with higher rubber prices.
The Global Times, a subsidiary of the People's Daily, quoted Deng Yali, vice-chairman of China Rubber Industry Association, as saying rubber prices rose more than 80% in 2010, cutting into manufacturer profits. The report also states China uses one-third of the 9 million tonnes of rubber used worldwide on a yearly basis.
Chinese consumer tyre exports to the United States totalled 31.1 million units in 2010, down from 43 million in 2009, according to reports.
Malaysia to Cut Middlemen Out of Rubber Trade
The government of Malaysia plans to increase profits for rubber small holders by implementing various initiatives, including reducing the role of the middleman.
Rural and Regional Development Minister Datuk Seri Shafie Apdal said with the current price of rubber at RM16.29 per kilo, small holdings could only take in half the amount as they depended on middlemen.
He said the ministry also plans to establish factories to process rubber in holdings that are 5,000ha or bigger.
Shafie said this after presenting aid to repair old houses in Kampung Lembah Bakti here yesterday (January 23).
On another matter, Shafie said the ministry had spent RM431.6mil in repairing and building more than 16,000 houses in rural areas nationwide last year under the House Assistance Programme (PBR).
He said the government has allocated RM300mil to help 9,146 families this year in repairing their houses.
La Niña is a danger to the economic recovery
The increasing price of commodities is causing input costs all over the world to rise and there's a real danger this could derail the tentativeeconomic recovery in the west.
Worse still, it could cripple emerging markets that are now the world's engine of growth. And a lot of it is down to the action of a "little girl".
The La Ni̱a weather phenomenon Рlittle girl in Spanish Рis causing havoc all over the world as it destroys crops and floods mines. It has already hit the price of coal, rubber, soybeans, palm oil and wheat Рand the phenomenon is expected to last until at least April.
La Ni̱a is a weather event that sees surface waters in the central and eastern Pacific Ocean cool. This brings heavy rainfall to places such as Australia, Indonesia, Brazil and Colombia Рand causes dryness in California and the southern US.
La Niña is a regular and predictable event. Unfortunately, this year it is much worse than normal.
"The solid record of La Niña strength only goes back about 50 years and this latest event appears to be one of the strongest ones over this time period," Bill Patzert, a climatologist at NASA's Jet Propulsion Laboratory in California said. Dr Rob Allan, a scientific manager at the Met Office, agrees. He even raises the prospect of a "double event".
"The average lifecycle of La Ni̱a indicated that there are a few months left to run Рbut it is not unknown that it can carry on for much longer." However, current models suggest that the weather system will weaken in the coming months.
The most high profile event hitting business has been the devastating floods in Queensland, Australia, which have washed away infrastructure and closed mines. They have resulted in A$2.3bn (£1.4bn) of lost coal sales for the mining industry, according to the Queensland Resources Council. This sent the spot price of coking coal soaring to as high as $370 a tonne, significantly higher than the first quarter contract price of $225.
This is bad news for steel makers, which were already suffering from a jump in the price of iron ore. Steel prices have been forecast to rise and steel groups had been hoping to see an increase in margins this year. The floods may have put paid to that.
BHP Billiton has said that its coal production slumped by 30pc in the final quarter of last year, although stockpiles across its supply chain meant that sales were only hit by 15pc.
Perhaps the most worrying aspect for chief executives of mining companies is the prospect of emergency taxation to bolster reconstruction efforts in Australia. Most miners have seen their cashflows boosted significantly by rising commodity prices and they successfully battled plans for a new supertax on mining profits in Australia last year. If a new reconstruction tax is introduced, it is likely the government will win that battle as it will have the moral high ground.
But it is not just miners that could see their finances hurt by La Ni̱a weather patterns. The weather has hit agriculture hard in Asia Рand prices of products used in manufacturing such as rubber and palm oil have been on the rise.
On Friday, rubber futures hit an all-time high after La Niña floods in Thailand caused a shortage. Thailand is the world's largest exporter of rubber, which is used in a wide variety of manufacturing processes. Demand for rubber from China and India's carmakers has been particularly strong. The weather in the southern rubber-producing states is expected to worsen.
Rains in Brazil have hit crop production – and even the price of fruit is expected to soar in the country, which is battling significant inflation. In Sao Paulo, lettuce, broccoli, watercress and cauliflower production have reportedly fallen by 20pc, prompting a 60pc rise in vegetable prices.
Inflation is a real threat to the global economy and concerns are mounting that central banks may have to increase rates earlier than they wanted – putting the recovery at risk.
This little girl could have a very big impact over the next few months. GW
Ivory Coast worries drive cocoa to five-month high
Cocoa prices are expected to surge today after the Ivory Coast’s president-elect, Alassane Ouattara, imposed an export ban on the commodity.
The price last week rose almost 8pc to $2,150 (£1,340) per tonne in London – a five-month high – on concerns about political unrest in the country, the world’s largest grower of beans.
There has been turmoil in the West African country since a disputed election in late November, but the supply of cocoa has not yet been affected. However, traders will now be expecting a jump in the cocoa price after Mr Ouattara, the internationally recognised winner of the elections, sent a letter to leading cocoa exporters yesterday ordering them to stop overseas shipments until February 23 in an attempt to oust incumbent Laurent Gbagbo.
According to forecasts by Macquarie, Ivory Coast’s harvests will be up 1.9pc from last year, so the market was expecting to be well supplied.
Traders had said there were no fundamental cocoa supply problems and believed a rush of fund buying had boosted the price.
Now, any reduction in supply is likely to push the price towards a 33-year high, since the Ivory Coast accounts for about 40pc of global cocoa exports.
Exports could stop today and all eyes will be on attempts by industry bodies to coordinate traders’ efforts. RM
Oil slides lower
Amid a general correction in the commodities market, Brent crude oil slipped as low as $95.5 per barrel at one point last week, having hovered nearer the $100 per barrel mark for the last few weeks.
In America, West Texan Intermediary dropped as low as $88, with the spread between the two widening.
Inventories of oil are rising across the US and it appears that worries about the dollar are the main driver supporting crude at its current price
Rubber supply stretched tight
The booming global automobile sector - especially in countries such as China and India - has accelerated demand for tyres. But the world's natural rubber supply is likely to remain tight for the next two years due to a lower yield from major producing countries such as Thailand.
The Association of Natural Rubber Producing Countries (ANRPC) estimated natural rubber supply increased by 6.3% to touch 9.4 million tonnes during 2010, but expects a drop in production from Thailand this year due to an extended winter and unpredictable rains. Production in Indonesia also dropped for this harvest due to unusual rains.
Still, the global rubber supply in 2011 is expected to equal last year's total due to the chance of increased output in many major growing countries, said Jom Jacob, senior economist at the ANRPC.
Thailand is planning to reduce its rubber plantations by 815,000 hectares in the South to grow oil palm trees. It will expand rubber plantations in the North and Northeast by 870,000 hectares. A shift in the supply curve is expected from 2012 due to the new planting areas reaching the yielding stage, said Mr Jacob.
He expects the impact of supply from such a large area to be partly offset by uprooting of old rubber trees in all major producing countries.
Labour availability and climate are the two main risk factors for rubber supply. Delay in replanting due to current high prices and crop expansion in non-traditional areas where yield will be lower are factors to watch out for in the near future, said ANRPC secretary-general Djoko S. Damardjati.
Inappropriate planning for synthetic rubber production is also making the situation tight, said Stephen Evans, the secretary-general of the International Rubber Study Group (IRSG). Globally, a shortfall is being reported in the production of butadiene, an important industrial chemical used as a monomer in the production of synthetic rubber.
India imports more than 80% of its synthetic rubber. The Rubber Board of India reported the share of natural rubber in automobile tyres is 73% and synthetic only 27%. Globally, synthetic rubber averages 56% composition in tyres against 44% natural rubber.
The IRSG said during 2010, natural rubber demand stood at 10.3 million tonnes while synthetic was 13.6 million tonnes. Rising crude oil prices have been a major factor in the production and consumption of synthetic rubber as it is mostly produced from the cracking of feedstock naphtha.
"Indian synthetic rubber production is non-existent, unlike China that has strategically built up huge capacities. In the past five years, India has only added 0.5 million tonnes of synthetic rubber production capacity," said Mr Evans.
India's monthly production of synthetic rubber totals around 8,000 to 9,000 tonnes against demand of 30,000 to 33,000 tonnes. "Based on the recent market experience of petrochemical cracker diets going light, butadiene supply will be constrained," he added.
The quantity of butadiene produced depends on the hydrocarbons used as feed. "The discovery of cheaper natural gas like shale gas in the United States has led to less production of butadiene as a byproduct. Most plants in the United States are flexible enough to switch quickly," said Mr Evans.
The supply of butadiene in the United States has been light the last two years. Europe, Canada and China are also trying the new cheaper and abundant shale gas. More countries adapting to the new feedstock will mean less butadiene.
India's natural rubber production ranking is being challenged by Vietnam. India's share as a percentage of total planted area of the ANRPC has remained almost the same from 2005 (7.5%) to 2009 (7.8%).
IRSG officials estimate rubber demand in 2010 to touch 23.9 million tonnes, growth of 12.9% over the previous year. In 2011, demand is estimated at 25.5 million tonnes with growth of 6.7%.
India's automotive market gained momentum the past two years as the country rode strong economic growth despite a global slump. Rising disposable incomes, easier access to consumer credit, plenty of product action and some aggressive discounting by manufacturers have jumpstarted car sales.
The Society of Indian Automobile Manufacturers said 12.29 million vehicles were sold from April 2009 to March 2010. This included passenger vehicles, commercial vehicles, three-wheelers and two-wheelers.
China's tyre industry is also finding it hard to cope with higher rubber prices.
The Global Times, a subsidiary of the People's Daily, quoted Deng Yali, vice-chairman of China Rubber Industry Association, as saying rubber prices rose more than 80% in 2010, cutting into manufacturer profits. The report also states China uses one-third of the 9 million tonnes of rubber used worldwide on a yearly basis.
Chinese consumer tyre exports to the United States totalled 31.1 million units in 2010, down from 43 million in 2009, according to reports.
Rubber Board to approach Maharashtra for GM rubber field trials
The Rubber Board plans to soon approach the Maharashtra Government to hold field trials of genetically-modified (GM) rubber.
“The Kerala Government is in-principle opposed to GM crops. Therefore, we plan to approach the Maharashtra Government, to allocate a plot for us for planting GM rubber,” said Mr Toms Joseph, Deputy Director (Economic Research) of the Rubber Board. The Kerala Agriculture Minister, Mr Mullakara Ratnakaran, a couple of months back wrote a letter to the Union Environment and Forests Minister, Mr Jairam Ramesh, opposing the clearance given by the Genetic Engineering Appraisal Committee (GEAC) for field trials.
His opposition was on the grounds that it would have an adverse effect on the ecosystem.
In his reply, Mr Ramesh said that without field trials, it would not be possible to ascertain any adverse effects to the ecosystem from GM rubber.
The Rubber Board has been given the go-ahead to hold field trials by the GEAC.
“We have been told that the permission has been given and we are waiting for the letter,” said Mr Joseph on the sidelines of the India Rubber Expo 2011.
The GM rubber plant, in which MnSOD gene, taken from rubber tree itself has been incorporated, is resistant to drought and stress.
Suitable place
It can withstand higher temperatures and can be introduced in Maharashtra where the temperature is higher than in Kerala that accounts for over 95 per cent of natural rubber grown in the country.
“The yield and other characteristics will be clear during the field trial,” Mr Joseph said. The development of GM rubber is significant in the wake of weather change affecting rubber production.
During the current fiscal, rubber production was estimated to increase to 8.93 lakh tonnes (lt) from 8.31 lt last year.
However, with weather playing truant during September-October, it has been pruned to 8.51 lt.
Ministry to cut middlemen out of rubber trade
LABIS: The government plans to increase profits for rubber small holders by implementing various initiatives, including reducing the role of the middleman.
Rural and Regional Development Minister Datuk Seri Shafie Apdal said with the current price of rubber at RM16.29 per kilo, small holdings could only take in half the amount as they depended on middlemen.
He said the ministry also plans to establish factories to process rubber in holdings that are 5,000ha or bigger.
Shafie said this after presenting aid to repair old houses in Kampung Lembah Bakti here yesterday.
On another matter, Shafie said the ministry had spent RM431.6mil in repairing and building more than 16,000 houses in rural areas nationwide last year under the House Assistance Programme (PBR).
He said the government has allocated RM300mil to help 9,146 families this year in repairing their houses.
Sunday, January 23, 2011
Spot rubber zooms to Rs 235 a kg
Spot rubber zooms to Rs 235 a kg
Kottayam, Jan. 21
Spot rubber changed hands at another record price on Friday. The market seemed to be following sharp gains on the Tokyo Commodity Exchange (TOCOM) and Bangkok, ignoring the marginal declines in domestic futures on the National Multi Commodity Exchange (NMCE). There were no quantity sellers or profit booking at higher levels even during closing hours and the prices ruled firm on fresh buying and short covering.
Among other reports, the key Tokyo and Shanghai rubber futures hit all-time highs as a weak yen against dollar triggered speculative buying while further gains were expected due to strong demand and short supplies.
Sheet rubber flared up to Rs 235 (229.50) a kg, according to dealers. The grade increased to Rs 234 (230) a kg as quoted by the Rubber Board.
FUTURES WEAKEN
RSS 4 weakened with February series slipping to Rs 238.02 (238.69), March to Rs 243.80 (244.81), April to Rs 252 (253.68) and May to Rs 258.32 (259.90) a kg for on the NMCE.
The January futures for RSS 3 improved to ¥476.8 (Rs 262.93) from ¥464.1 a kg during the day session but then slipped to ¥476 (Rs 262.49) in the night session on the TOCOM. The grade (spot) closed firm at Rs 261.87 (257.73) a kg at Bangkok.
Spot rates were (Rs/kg): RSS-4: 235 (229.50); RSS-5: 225 (223); ungraded: 220 (215); ISNR 20: 226 (224) and latex 60 per cent: 155 (155).
Tokyo, shanghai rubber futures hit records
Tokyo (january 22, 2011) : key tokyo and shanghai rubber futures hit record highs on friday as speculators continued to bet on further market upside due to strong demand and supply tightness. the key tokyo commodity exchange rubber contract for june delivery settled at 477.6 yen, up 11.9 yen or 2.6 percent, after scaling a record high of 478.1 yen per kg.
the market posted a weekly gain of about 4 percent, easing slightly from the previous week's 5.3 percent rise. japanese traders have said tocom futures could even hit 500 yen in the next month as the wintering season begins in producing countries and reduces output. the most active shanghai rubber futures contract for may delivery closed at 40,650 yuan ($6,173) per tonne, up from thursday's close of 40,130 yuan. the contract hit a record high of 40,985 yuan per tonne earlier on friday.
Natural rubber hits record high of Rs 235 a kg on global cues.
NEW DELHI: Prices of natural rubber in the domestic market touched a record high of Rs 235 per kg today, tracking global rates which hit a new high on supply concerns emanating from biggest producer Thailand.
Prices of natural rubber, a key component for making tyres, today closed at Rs 234 per kg in Kottayam and Kochi, which account for 90 per cent of the country's production.
The price of the commodity also shot up to a record high of Rs 261 per kg in Bangkok on concerns that supply from Thailand, the top exporter of the material, may decline, worsening a supply shortage after a flood warning in the nation.
"International prices are at a record high and are likely to remain at that level in the near future due to strong demand," said the Indian Rubber Dealers Federation .
Domestic prices are following the international trend, it added.
A surge in demand from the US on the back of better-than -expected growth in the automotive segment and a strong demand from China is pushing the global prices of the commodity and the impact is also felt on the domestic market, traders said.
Natural rubber prices have been on the rise for the past few months due to disruption of production in Kerala, which accounts for 90 per cent of the country's production, coupled with a rally in international prices of the commodity.
However, the present rally in the prices of commodity is due to global cues, Jalal said, adding that there is no supply crunch in the country.
India's production of natural rubber in 2010 is estimated at around 8.5 lakh tonnes, whereas the total demand for natural rubber in the country is nearly 10 lakh tonnes per annum.
Rubber mart set to stay bullish
Rubber prices are expected to continue to scale new highs next week, says a dealer.
The dealer said solid demand and a tight supply due to the rainy season would continue to keep the market bullish.
"We will see the bad weather pushing prices while the high crude oil price will also boost the market," a dealer said.
He said the wintering season is expected to continue until April.
On a Friday-to-Friday basis, the Malaysian Rubber Board's official physical seller price for tyre-grade SMR 20 surged 53 sen to 1,646 sen per kg from 1,593 sen last week.
Latex in bulk rose 24 one sen to 1,028.5 sen per kg from 1,004.5 sen previously.
The unofficial seller closing price for tyre-grade SMR 20 rose 56.5 sen to hit 1,656.5 sen per kg from 1,600 sen last week, while latex in bulk increased 22.5 sen to 1,030.5 sen per kg from 1,008 sen previously.
Saturday, January 22, 2011
Spot rubber zooms to Rs 235 a kg.
Spot rubber zooms to Rs 235 a kg
Kottayam, Jan. 21
Spot rubber changed hands at another record price on Friday. The market seemed to be following sharp gains on the Tokyo Commodity Exchange (TOCOM) and Bangkok, ignoring the marginal declines in domestic futures on the National Multi Commodity Exchange (NMCE). There were no quantity sellers or profit booking at higher levels even during closing hours and the prices ruled firm on fresh buying and short covering.
Among other reports, the key Tokyo and Shanghai rubber futures hit all-time highs as a weak yen against dollar triggered speculative buying while further gains were expected due to strong demand and short supplies.
Sheet rubber flared up to Rs 235 (229.50) a kg, according to dealers. The grade increased to Rs 234 (230) a kg as quoted by the Rubber Board.
FUTURES WEAKEN
RSS 4 weakened with February series slipping to Rs 238.02 (238.69), March to Rs 243.80 (244.81), April to Rs 252 (253.68) and May to Rs 258.32 (259.90) a kg for on the NMCE.
The January futures for RSS 3 improved to ¥476.8 (Rs 262.93) from ¥464.1 a kg during the day session but then slipped to ¥476 (Rs 262.49) in the night session on the TOCOM. The grade (spot) closed firm at Rs 261.87 (257.73) a kg at Bangkok.
Spot rates were (Rs/kg): RSS-4: 235 (229.50); RSS-5: 225 (223); ungraded: 220 (215); ISNR 20: 226 (224) and latex 60 per cent: 155 (155).
Jan. 21 (Bloomberg) -- Rubber futures in Tokyo and Shanghai reached records on concern that supply from Thailand, the top exporter, may decline, worsening a supply shortage, after the government issued a flood warning.
The June-delivery contract climbed as much as 2.7 percent to 478.1 yen a kilogram ($5,766 a metric ton) on the Tokyo Commodity Exchange and settled at 477.6 yen. The most-active contract climbed 5.1 percent this week, as demand expands on rising car sales led by China and India, outpacing weather- constrained supply.
Monsoon rains may cause flash floods and landslides in nine of Thailand’s southern provinces, the Department of Disaster Prevention and Mitigation said yesterday. The fourteen provinces in the south represent about 80 percent of the country’s total rubber output.
“The market is boosted by supply concern,” said Hisaaki Tasaka, an analyst at ACE Koeki Co. in Tokyo. “Thai shippers are bullish as weather conditions may worsen.”
The cash rubber price in Thailand reached a record 175.3 baht ($5.72) per kilogram today as supply shortages have lingered, while demand is increasing from the car industry, according to the Rubber Research Institute of Thailand. Some plantation areas have entered the low-production season, the institute said on its website.
“Buyers are still in the market despite high prices to secure the commodity amid increasing supply concerns,” said Wanwilai Choilek, manager at the Hadyai, Thailand branch of commodity broker DS Futures Ltd.
Output during the low season, which runs until May, can fall by 45 percent to 60 percent from the peak, according to the Association of Natural Rubber Producing Countries. The period occurs at the same time in northern Indonesia and Malaysia.
China Stockpiles
Futures also gained amid speculation that buyers in China, the largest consumer, may boost purchases to replenish reserves before the Lunar New Year holiday, Tasaka said. The week-long holiday starts Feb. 2.
Natural-rubber inventories in China declined 175 tons to 68,675 tons, based on a survey of 10 warehouses, the Shanghai Futures Exchange said Jan. 14. That’s 55 percent lower than last year’s peak of 151,832 tons.
China’s economy expanded 10.3 percent in 2010 to 39.8 trillion yuan ($6.04 trillion), the fastest pace in three years, the statistics bureau report showed yesterday. That compares with 9.2 percent in 2009.
China’s vehicle sales may grow 10 percent to 15 percent this year after jumping 32 percent to 18.06 million vehicles in 2010, according to forecast by the China Association of Automobile Manufacturers.
The May-delivery contract in Shanghai advanced as much as 2.1 percent to 40,985 yuan ($6,224) a ton.
Maruti hikes prices of vehicles by up to Rs 8,000
NEW DELHI: Giving in to rising input cost pressures, the country's largest carmaker by sales, Maruti Suzuki India has increased prices of its vehicles by up to Rs 8,000 across models, except its newly launched compact car Alto K10 .
"Yes, we did increase the prices on January 17 ranging between 0.5 per cent and 2.2 per cent," Maruti Suzuki India managing executive officer (Marketing and Sales) Mayank Pareek said.
Except the new hatchback Alto-K10, the price hike will translate into an increase of price between Rs 1,000 and Rs 8,000 across different models made by the company.
The company had in December last year said it would increase prices during January as the rising input costs, especially that of commodities have become unbearable.
"The price of natural rubber, which used to be Rs 100 per kg, has gone up to Rs 200 per kg. Copper price has increased by 12-15 per cent and steel has also seen a similar increase," Pareek had said then.
Rubber prices at record high on global cues
NEW DELHI: Continuing its gain for the third straight week, natural rubber prices on Thursday touched all time high of Rs 230 per kg on strong global cues.
Prices of natural rubber, a key component for making tyres, on Thursday closed at Rs 230 per kg in Kottayam and Ernakulam, which accounts for 90% of the country's production.
According to industry sources, the rally in natural rubber prices is due to the surge in prices of the commodity in the international market. Natural rubber prices in the global market touched a fresh high of Rs 250 per kg as strong demand from China and the US is fuelling the prices of the commodity.
A surge in demand from the US on the back of better-than-expected growth in the automotive segment is further pushing the global prices of the commodity and the impact is also felt on the domestic market, said an expert. India's production of natural rubber in 2010 is estimated at around 8.5 lakh tonnes, whereas the total demand for natural rubber in the country is nearly 10 lakh tonnes per annum.
Tokyo, Shanghai Futures Hit Records; More Upside Seen
Key Tokyo and Shanghai rubber futures hit record highs on Friday (January 21) as a weaker yen against the dollar prompted speculators to boost buying, with further gains expected due to strong demand and supply shortages.
The key Tokyo Commodity Exchange rubber contract for June delivery was up 8.3 yen, or 1.8 percent, at 474.0 yen per kg as of 0230 GMT after setting a record high of 475.5 yen.
"The benchmark contract could rise further, tracking strong gains in Shanghai, as a trend for the yen's depreciation against the dollar has started to emerge," said a trader.
Japanese traders have said TOCOM futures could even hit 500 yen in the next month as the wintering season begins in producing countries and reduces output.
The most active Shanghai rubber futures contract for May delivery was changing hands at 40,305 yuan per tonne as af 0232 GMT, up from Thursday's (January 20) close of 40,130 yuan, after climbing to a historic record 40,520 yuan. Volume was 329,617 lots.
Natural rubber changed hands at another record in Asia, just a few cents away from $6 a kg, as fears of tight supply persisted and dealers covered stocks in anticipation of more purchases from tyre makers, industry sources said.
Oil prices slumped about 2 percent on Thursday (January 20) on a sell-off sparked by an unexpected rise in U.S. crude stockpiles and worries that China might tighten monetary policy to fight inflation.
The dollar hit one-week highs against the yen and was last trading around 83 yen.
Asian physical rubber prices were offered higher on Thursday (January 20) as futures prices on the Shanghai market hit a record high, with supply remaining thin from big producing countries, dealers said.
Oil and copper dropped sharply and gold slipped on Thursday (January 20) as investors worried that China will move to cool its booming economy, the engine of growth in commodity demand this decade.
Stocks fell on Thursday (January 20) as lacklustre tech and materials earnings failed to live up to heightened expectations, threatening to short-circuit a seven-week run.
General Motors Co said it is investing $540 million in its motor plant in central Mexico to build more fuel-efficient engines for the recovering North American automobile market.
(Reuters, January 21, 2011)
Rubber gains on tight supply
Rubber yesterday traded with the positive node and settled 1.92% up at 23890 as a flood warning in Thailand, the world’s largest supplier, spurred purchases, raising concerns that shortages of the commodity used in tires may worsen.
Rubber production in Thailand during the season, which runs until May, shrinks by 45 percent to 60 percent from peak production, the Association of Natural Rubber Producing Countries has said.
The low-production period occurs at the same time in northern Indonesia and Malaysia, lowering output, the group said. In yesterday's trading session Rubber has touched the low of 23400 after opening at 22410, and finally settled at 23890.
For today's session market is looking to take support at 23562, a break below could see a test of 23233 and where as resistance is now likely to be seen at 24057, a move above could see prices testing 24223.
Trading Ideas:
Rubber trading range is 23233-24223.
Rubber gained as a flood warning in Thailand spurred purchases
Rubber daily stocks at Shanghai exchange came down by 270 tonnes
Spread between Rubber FEB & MAR contracts yesterday ended at 625.00. Spread yesterday traded in the range of 576 to 1665.
RUBBER STILL LOOKING FIRM BUT MARKET IS OVERBIT WILL WAIT FOR FRESH ENTRY.
NMCE accredited warehouses Rubber stock rosed by 79kgs to 10133kgs.
Everyone's rushing to grow rubber
Here's some good news. Rubber farmers are rich, judging from a car-buying spree in the rubber-growing provinces of Surat Thani and Songkhla, where almost 1,000 cars were sold in just one day last week.
Next, Deputy Agriculture and Cooperatives Minister Supachai Phosu announced a plan to give free rubber saplings plus other grants to new rubber farmers under the government's plan to increase the acreage of rubber plantations by 800,000 rai within three years.
That good news is followed by bad news, however. Forestry officials cut down and cleared away over 500 rai of rubber plantations in Ranong and Phitsanulok because they were located in protected forest areas.
They also threatened to fell more rubber trees once the Royal Forestry Department wins eviction cases against plantation owners who encroached on forest land.
The two sides of the same issue are no coincidence.
What links them is the record-high rubber price, which hit 159 baht a kilogramme at the main rubber market in Songkhla yesterday.
It's okay for rubber growers to enjoy the new high after having long endured the falling price of rubber.
But the government, especially the Agriculture and Cooperatives Ministry, must not get carried away by the lucrative income. The demolition of rubber plantations by forest rangers last week hinted that something "might go wrong" with the rapid expansion of rubber cultivation during the rubber price rally.
A senior forestry official who led the rubber demolition operation in Ranong's Kra Buri district said the surge in rubber price had led to widespread forest encroachment by rubber farmers and agribusiness operators.
A similar situation had occurred in Phitsanulok province where almost 500 rai of a watershed forest in Nakhon Thai district had been encroached upon by rubber planters.
Forest encroachment is not the only problem resulting from rapid expansion of rubber cultivation areas. There is also the issue of food security surrounding the transformation of food crop farming to growing non-edible cash crops.
Another issue to watch is corruption in the government's scheme to increase rubber cultivation, which involves a multi-billion-baht budget for rubber saplings procurement and grants for other farm materials.
The 1.44-billion-baht rubber saplings procurement scandal, in which 44 state officials and businessmen were charged with malfeasance, should be a big warning to the Democrat Party-led government.
The notorious rubber sapling procurement was part of the Thaksin administration's policy to expand rubber cultivation to one million rai between 2003-2006.
The deputy agriculture minister said the ministry would spend a budget of 580 million baht in the first year of the three-year rubber cultivation expansion scheme, which was endorsed by the cabinet last month and will officially kick off next month. Of the 800,000-rai target, 500,000 rai will be in the Northeast; 150,000 rai in the North; and 150,000 rai in the Central, East and South.
He expects a total of 160,000 farmers to join the scheme and the ministry will soon call a bid for the production of rubber saplings for distribution to farmers.
Mr Supachai claimed that the project is a "win" for all involved. Farmers will have more money in their pockets, the government will earn more revenue and more jobs will be created.
He even boasted that an increase in rubber plantation is good for the environment as it "helps increase rain volume and reduce global warming". The deputy minister seems not to care or is aware of undesirable effects from the scheme.
But the rubber plantation expansion must not go ahead until the government comes up with concrete measures to prevent forest encroachment, sustain food security and guarantee farmers - not giant agribusiness firms - that they will benefit from this scheme.
Things are not as simple as Mr Supachai thinks when it comes to the rubber issue. The government cannot simply say something like: "Rubber prices are up, folks. Let's grow more rubber trees!".
Tokyo and shanghai rubber futures strike record highs
Tokyo (january 21, 2011) : key tokyo and shanghai rubber futures hit record highs on thursday as speculators bet heavily on strong demand and supply shortages in the future. the key tokyo commodity exchange rubber contract for june delivery settled down 0.4 percent, or 1.7 yen, at 465.7 yen per kg after striking a record high of 470.4 yen.
the most active shanghai rubber futures contract for may delivery climbed as high as 40,220 yuan ($6,110) per tonne on thursday, exceeding the previous peak of 39,980 yuan hit the day before. the contract closed up 210 yuan at 40,130 yuan, with volume inching up to 788,972 lots.
japanese traders have said tocom futures could hit 500 yen in the next month as the wintering season begins in producing countries, causing reduced output. bad weather over the past few months has delayed the stocking of rubber needed during the wintering season, adding to supply concerns, they have said.
India rubber prices may climb on auto sector demand
CHENNAI (Commodity Online) : With just three months left in the current fiscal, tyre companies in India can import only a maximum of 40,000 tons of rubber while the deficit is estimated at 1,00,000 tons. Needless to say, prices of natural rubber are northbound.
The prices shot up double the previous year figures to almost Rs 250 a kg this year. Mining, pharma (gloves), surgical, footwear and other related industries are also in need of natural rubber.
Government had recently brought down import duties from 20% to 8%. Even this measure could not stave off price surge.
Vinod Simon, president of All India Rubber Industries Association (AIRIA) told Financial Express on the sidelines of the 6th Rubber Expo in Chennai, "Our objective is to ensure availability of the commodity rather than look at prices at this point of time.”
India is the second largest consumer of natural rubber after China, while it ranks fourth in production at 9.5 lakh tons . Thailand produces 3.6 million tons; Indonesia, a decent 2.5 million tons and Malaysia another 1.7 million tons.
Simon stressed on finding out more options to increase rubber acreage and escalate production. Recently, states like Tripura were identified to have conditions supporting rubber cultivation.
He said synthetic rubber production, currently at 2.5 lakh tons is yet to make a difference to prices as a substitute.
For the time being, Chinese demand of natural rubber is equal to the rubber output of Thailand at 3.6 million ton per annum. The government there is doing all it can to help the domestic industry with imports.
The per capita consumption of natural rubber in India is 1 kg as against 12 kgs of other developed countries. At the time of filing this report, the February contract of rubber was trading a tad lower by 0.17% at Rs.23405
Natural rubber prices at record high on global cues
NEW DELHI: Continuing its gain for the third straight week, natural rubber prices on Thursday touched all time high of Rs 230 per kg on strong global cues.
Prices of natural rubber, a key component for making tyres, today closed at Rs 230 per kg in Kottayam and Kochi, which accounts for 90 per cent of the country’s production.
According to industry sources, the rally in natural rubber prices is due to the surge in prices of the commodity in the international market.
Natural rubber prices in the global market touched a fresh high of Rs 250 per kg as strong demand from China and the US is fuelling the prices of the commodity.
“International prices are at record high level and are likely to remain at that level in near future due to strong demand,” Indian Rubber Dealers Federation Treasurer Mr Ibrahim Jalal has said.
Domestic prices are following the international trend, he added.
A surge in demand from the US on the back of better—than—expected growth in the automotive segment is further pushing the global prices of the commodity and the impact is also felt on the domestic market, said an expert.
However, the present rally in the prices of commodity is due to the global cues as the supply situation in the country has improved, Mr Jalal said.
India’s production of natural rubber in 2010 is estimated at around 8.5 lakh tonnes, whereas the total demand for natural rubber in the country is nearly 10 lakh tonnes per annum. – PTI
Kottayam, Jan. 21
Spot rubber changed hands at another record price on Friday. The market seemed to be following sharp gains on the Tokyo Commodity Exchange (TOCOM) and Bangkok, ignoring the marginal declines in domestic futures on the National Multi Commodity Exchange (NMCE). There were no quantity sellers or profit booking at higher levels even during closing hours and the prices ruled firm on fresh buying and short covering.
Among other reports, the key Tokyo and Shanghai rubber futures hit all-time highs as a weak yen against dollar triggered speculative buying while further gains were expected due to strong demand and short supplies.
Sheet rubber flared up to Rs 235 (229.50) a kg, according to dealers. The grade increased to Rs 234 (230) a kg as quoted by the Rubber Board.
FUTURES WEAKEN
RSS 4 weakened with February series slipping to Rs 238.02 (238.69), March to Rs 243.80 (244.81), April to Rs 252 (253.68) and May to Rs 258.32 (259.90) a kg for on the NMCE.
The January futures for RSS 3 improved to ¥476.8 (Rs 262.93) from ¥464.1 a kg during the day session but then slipped to ¥476 (Rs 262.49) in the night session on the TOCOM. The grade (spot) closed firm at Rs 261.87 (257.73) a kg at Bangkok.
Spot rates were (Rs/kg): RSS-4: 235 (229.50); RSS-5: 225 (223); ungraded: 220 (215); ISNR 20: 226 (224) and latex 60 per cent: 155 (155).
Jan. 21 (Bloomberg) -- Rubber futures in Tokyo and Shanghai reached records on concern that supply from Thailand, the top exporter, may decline, worsening a supply shortage, after the government issued a flood warning.
The June-delivery contract climbed as much as 2.7 percent to 478.1 yen a kilogram ($5,766 a metric ton) on the Tokyo Commodity Exchange and settled at 477.6 yen. The most-active contract climbed 5.1 percent this week, as demand expands on rising car sales led by China and India, outpacing weather- constrained supply.
Monsoon rains may cause flash floods and landslides in nine of Thailand’s southern provinces, the Department of Disaster Prevention and Mitigation said yesterday. The fourteen provinces in the south represent about 80 percent of the country’s total rubber output.
“The market is boosted by supply concern,” said Hisaaki Tasaka, an analyst at ACE Koeki Co. in Tokyo. “Thai shippers are bullish as weather conditions may worsen.”
The cash rubber price in Thailand reached a record 175.3 baht ($5.72) per kilogram today as supply shortages have lingered, while demand is increasing from the car industry, according to the Rubber Research Institute of Thailand. Some plantation areas have entered the low-production season, the institute said on its website.
“Buyers are still in the market despite high prices to secure the commodity amid increasing supply concerns,” said Wanwilai Choilek, manager at the Hadyai, Thailand branch of commodity broker DS Futures Ltd.
Output during the low season, which runs until May, can fall by 45 percent to 60 percent from the peak, according to the Association of Natural Rubber Producing Countries. The period occurs at the same time in northern Indonesia and Malaysia.
China Stockpiles
Futures also gained amid speculation that buyers in China, the largest consumer, may boost purchases to replenish reserves before the Lunar New Year holiday, Tasaka said. The week-long holiday starts Feb. 2.
Natural-rubber inventories in China declined 175 tons to 68,675 tons, based on a survey of 10 warehouses, the Shanghai Futures Exchange said Jan. 14. That’s 55 percent lower than last year’s peak of 151,832 tons.
China’s economy expanded 10.3 percent in 2010 to 39.8 trillion yuan ($6.04 trillion), the fastest pace in three years, the statistics bureau report showed yesterday. That compares with 9.2 percent in 2009.
China’s vehicle sales may grow 10 percent to 15 percent this year after jumping 32 percent to 18.06 million vehicles in 2010, according to forecast by the China Association of Automobile Manufacturers.
The May-delivery contract in Shanghai advanced as much as 2.1 percent to 40,985 yuan ($6,224) a ton.
Maruti hikes prices of vehicles by up to Rs 8,000
NEW DELHI: Giving in to rising input cost pressures, the country's largest carmaker by sales, Maruti Suzuki India has increased prices of its vehicles by up to Rs 8,000 across models, except its newly launched compact car Alto K10 .
"Yes, we did increase the prices on January 17 ranging between 0.5 per cent and 2.2 per cent," Maruti Suzuki India managing executive officer (Marketing and Sales) Mayank Pareek said.
Except the new hatchback Alto-K10, the price hike will translate into an increase of price between Rs 1,000 and Rs 8,000 across different models made by the company.
The company had in December last year said it would increase prices during January as the rising input costs, especially that of commodities have become unbearable.
"The price of natural rubber, which used to be Rs 100 per kg, has gone up to Rs 200 per kg. Copper price has increased by 12-15 per cent and steel has also seen a similar increase," Pareek had said then.
Rubber prices at record high on global cues
NEW DELHI: Continuing its gain for the third straight week, natural rubber prices on Thursday touched all time high of Rs 230 per kg on strong global cues.
Prices of natural rubber, a key component for making tyres, on Thursday closed at Rs 230 per kg in Kottayam and Ernakulam, which accounts for 90% of the country's production.
According to industry sources, the rally in natural rubber prices is due to the surge in prices of the commodity in the international market. Natural rubber prices in the global market touched a fresh high of Rs 250 per kg as strong demand from China and the US is fuelling the prices of the commodity.
A surge in demand from the US on the back of better-than-expected growth in the automotive segment is further pushing the global prices of the commodity and the impact is also felt on the domestic market, said an expert. India's production of natural rubber in 2010 is estimated at around 8.5 lakh tonnes, whereas the total demand for natural rubber in the country is nearly 10 lakh tonnes per annum.
Tokyo, Shanghai Futures Hit Records; More Upside Seen
Key Tokyo and Shanghai rubber futures hit record highs on Friday (January 21) as a weaker yen against the dollar prompted speculators to boost buying, with further gains expected due to strong demand and supply shortages.
The key Tokyo Commodity Exchange rubber contract for June delivery was up 8.3 yen, or 1.8 percent, at 474.0 yen per kg as of 0230 GMT after setting a record high of 475.5 yen.
"The benchmark contract could rise further, tracking strong gains in Shanghai, as a trend for the yen's depreciation against the dollar has started to emerge," said a trader.
Japanese traders have said TOCOM futures could even hit 500 yen in the next month as the wintering season begins in producing countries and reduces output.
The most active Shanghai rubber futures contract for May delivery was changing hands at 40,305 yuan per tonne as af 0232 GMT, up from Thursday's (January 20) close of 40,130 yuan, after climbing to a historic record 40,520 yuan. Volume was 329,617 lots.
Natural rubber changed hands at another record in Asia, just a few cents away from $6 a kg, as fears of tight supply persisted and dealers covered stocks in anticipation of more purchases from tyre makers, industry sources said.
Oil prices slumped about 2 percent on Thursday (January 20) on a sell-off sparked by an unexpected rise in U.S. crude stockpiles and worries that China might tighten monetary policy to fight inflation.
The dollar hit one-week highs against the yen and was last trading around 83 yen.
Asian physical rubber prices were offered higher on Thursday (January 20) as futures prices on the Shanghai market hit a record high, with supply remaining thin from big producing countries, dealers said.
Oil and copper dropped sharply and gold slipped on Thursday (January 20) as investors worried that China will move to cool its booming economy, the engine of growth in commodity demand this decade.
Stocks fell on Thursday (January 20) as lacklustre tech and materials earnings failed to live up to heightened expectations, threatening to short-circuit a seven-week run.
General Motors Co said it is investing $540 million in its motor plant in central Mexico to build more fuel-efficient engines for the recovering North American automobile market.
(Reuters, January 21, 2011)
Rubber gains on tight supply
Rubber yesterday traded with the positive node and settled 1.92% up at 23890 as a flood warning in Thailand, the world’s largest supplier, spurred purchases, raising concerns that shortages of the commodity used in tires may worsen.
Rubber production in Thailand during the season, which runs until May, shrinks by 45 percent to 60 percent from peak production, the Association of Natural Rubber Producing Countries has said.
The low-production period occurs at the same time in northern Indonesia and Malaysia, lowering output, the group said. In yesterday's trading session Rubber has touched the low of 23400 after opening at 22410, and finally settled at 23890.
For today's session market is looking to take support at 23562, a break below could see a test of 23233 and where as resistance is now likely to be seen at 24057, a move above could see prices testing 24223.
Trading Ideas:
Rubber trading range is 23233-24223.
Rubber gained as a flood warning in Thailand spurred purchases
Rubber daily stocks at Shanghai exchange came down by 270 tonnes
Spread between Rubber FEB & MAR contracts yesterday ended at 625.00. Spread yesterday traded in the range of 576 to 1665.
RUBBER STILL LOOKING FIRM BUT MARKET IS OVERBIT WILL WAIT FOR FRESH ENTRY.
NMCE accredited warehouses Rubber stock rosed by 79kgs to 10133kgs.
Everyone's rushing to grow rubber
Here's some good news. Rubber farmers are rich, judging from a car-buying spree in the rubber-growing provinces of Surat Thani and Songkhla, where almost 1,000 cars were sold in just one day last week.
Next, Deputy Agriculture and Cooperatives Minister Supachai Phosu announced a plan to give free rubber saplings plus other grants to new rubber farmers under the government's plan to increase the acreage of rubber plantations by 800,000 rai within three years.
That good news is followed by bad news, however. Forestry officials cut down and cleared away over 500 rai of rubber plantations in Ranong and Phitsanulok because they were located in protected forest areas.
They also threatened to fell more rubber trees once the Royal Forestry Department wins eviction cases against plantation owners who encroached on forest land.
The two sides of the same issue are no coincidence.
What links them is the record-high rubber price, which hit 159 baht a kilogramme at the main rubber market in Songkhla yesterday.
It's okay for rubber growers to enjoy the new high after having long endured the falling price of rubber.
But the government, especially the Agriculture and Cooperatives Ministry, must not get carried away by the lucrative income. The demolition of rubber plantations by forest rangers last week hinted that something "might go wrong" with the rapid expansion of rubber cultivation during the rubber price rally.
A senior forestry official who led the rubber demolition operation in Ranong's Kra Buri district said the surge in rubber price had led to widespread forest encroachment by rubber farmers and agribusiness operators.
A similar situation had occurred in Phitsanulok province where almost 500 rai of a watershed forest in Nakhon Thai district had been encroached upon by rubber planters.
Forest encroachment is not the only problem resulting from rapid expansion of rubber cultivation areas. There is also the issue of food security surrounding the transformation of food crop farming to growing non-edible cash crops.
Another issue to watch is corruption in the government's scheme to increase rubber cultivation, which involves a multi-billion-baht budget for rubber saplings procurement and grants for other farm materials.
The 1.44-billion-baht rubber saplings procurement scandal, in which 44 state officials and businessmen were charged with malfeasance, should be a big warning to the Democrat Party-led government.
The notorious rubber sapling procurement was part of the Thaksin administration's policy to expand rubber cultivation to one million rai between 2003-2006.
The deputy agriculture minister said the ministry would spend a budget of 580 million baht in the first year of the three-year rubber cultivation expansion scheme, which was endorsed by the cabinet last month and will officially kick off next month. Of the 800,000-rai target, 500,000 rai will be in the Northeast; 150,000 rai in the North; and 150,000 rai in the Central, East and South.
He expects a total of 160,000 farmers to join the scheme and the ministry will soon call a bid for the production of rubber saplings for distribution to farmers.
Mr Supachai claimed that the project is a "win" for all involved. Farmers will have more money in their pockets, the government will earn more revenue and more jobs will be created.
He even boasted that an increase in rubber plantation is good for the environment as it "helps increase rain volume and reduce global warming". The deputy minister seems not to care or is aware of undesirable effects from the scheme.
But the rubber plantation expansion must not go ahead until the government comes up with concrete measures to prevent forest encroachment, sustain food security and guarantee farmers - not giant agribusiness firms - that they will benefit from this scheme.
Things are not as simple as Mr Supachai thinks when it comes to the rubber issue. The government cannot simply say something like: "Rubber prices are up, folks. Let's grow more rubber trees!".
Tokyo and shanghai rubber futures strike record highs
Tokyo (january 21, 2011) : key tokyo and shanghai rubber futures hit record highs on thursday as speculators bet heavily on strong demand and supply shortages in the future. the key tokyo commodity exchange rubber contract for june delivery settled down 0.4 percent, or 1.7 yen, at 465.7 yen per kg after striking a record high of 470.4 yen.
the most active shanghai rubber futures contract for may delivery climbed as high as 40,220 yuan ($6,110) per tonne on thursday, exceeding the previous peak of 39,980 yuan hit the day before. the contract closed up 210 yuan at 40,130 yuan, with volume inching up to 788,972 lots.
japanese traders have said tocom futures could hit 500 yen in the next month as the wintering season begins in producing countries, causing reduced output. bad weather over the past few months has delayed the stocking of rubber needed during the wintering season, adding to supply concerns, they have said.
India rubber prices may climb on auto sector demand
CHENNAI (Commodity Online) : With just three months left in the current fiscal, tyre companies in India can import only a maximum of 40,000 tons of rubber while the deficit is estimated at 1,00,000 tons. Needless to say, prices of natural rubber are northbound.
The prices shot up double the previous year figures to almost Rs 250 a kg this year. Mining, pharma (gloves), surgical, footwear and other related industries are also in need of natural rubber.
Government had recently brought down import duties from 20% to 8%. Even this measure could not stave off price surge.
Vinod Simon, president of All India Rubber Industries Association (AIRIA) told Financial Express on the sidelines of the 6th Rubber Expo in Chennai, "Our objective is to ensure availability of the commodity rather than look at prices at this point of time.”
India is the second largest consumer of natural rubber after China, while it ranks fourth in production at 9.5 lakh tons . Thailand produces 3.6 million tons; Indonesia, a decent 2.5 million tons and Malaysia another 1.7 million tons.
Simon stressed on finding out more options to increase rubber acreage and escalate production. Recently, states like Tripura were identified to have conditions supporting rubber cultivation.
He said synthetic rubber production, currently at 2.5 lakh tons is yet to make a difference to prices as a substitute.
For the time being, Chinese demand of natural rubber is equal to the rubber output of Thailand at 3.6 million ton per annum. The government there is doing all it can to help the domestic industry with imports.
The per capita consumption of natural rubber in India is 1 kg as against 12 kgs of other developed countries. At the time of filing this report, the February contract of rubber was trading a tad lower by 0.17% at Rs.23405
Natural rubber prices at record high on global cues
NEW DELHI: Continuing its gain for the third straight week, natural rubber prices on Thursday touched all time high of Rs 230 per kg on strong global cues.
Prices of natural rubber, a key component for making tyres, today closed at Rs 230 per kg in Kottayam and Kochi, which accounts for 90 per cent of the country’s production.
According to industry sources, the rally in natural rubber prices is due to the surge in prices of the commodity in the international market.
Natural rubber prices in the global market touched a fresh high of Rs 250 per kg as strong demand from China and the US is fuelling the prices of the commodity.
“International prices are at record high level and are likely to remain at that level in near future due to strong demand,” Indian Rubber Dealers Federation Treasurer Mr Ibrahim Jalal has said.
Domestic prices are following the international trend, he added.
A surge in demand from the US on the back of better—than—expected growth in the automotive segment is further pushing the global prices of the commodity and the impact is also felt on the domestic market, said an expert.
However, the present rally in the prices of commodity is due to the global cues as the supply situation in the country has improved, Mr Jalal said.
India’s production of natural rubber in 2010 is estimated at around 8.5 lakh tonnes, whereas the total demand for natural rubber in the country is nearly 10 lakh tonnes per annum. – PTI
Friday, January 21, 2011
Spot rubber scales new high
Spot rubber scales new high
Kottayam, Jan. 20
Spot rubber hit another all-time high on Thursday. The market improved on fresh buying and short covering catalyzed by the sharp gain in Bangkok spot price. According to analysts, the prices were set to explore further highs as supply concerns continued to lead the market to unforeseen levels in anticipation of more purchases from tyre makers.
The small scale industries using rubber as raw material are put to severe hardships and 30 per cent of them have all ready downed shutters, said the Kerala Small Scale Industries Association.
If effective steps are not taken to overcome the present crisis, the entire small units in Kerala will have to be closed down, according to Dr. T.C. Joseph, District President.
Sheet rubber increased to Rs 229.50 (227.00) a kg according to traders. The grade firmed up to Rs 230 (228) a kg, according to the Rubber Board.
FUTURES IMPROVE
RSS 4 improved further with February contracts rising to Rs 238.90 (234.40), March to Rs 245.15 (240.26), April to Rs 253.99 (249.30) and May to Rs 260 (255.68) a kg for on the National Multi Commodity Exchange.
RSS 3 (spot) flared up to Rs 257.73 (252.28) a kg at Bangkok. Its January futures slipped to ¥464.1 (Rs 257.04) from ¥465 a kg during the day session but then bounced back to ¥466.5 (Rs 258.38) in the night session on the Tokyo Commodity Exchange.
Spot rates were (Rs/kg): RSS-4: 229.50 (227); RSS-5: 223 (220); ungraded: 215 (211); ISNR 20: 224 (223) and latex 60 per cent: 155 (153).
Natural rubber prices will remain firm till April
Production likely to rise less than 5% this year.
The bullish trend in natural rubber prices could continue at least till April due to the tight supply situation, according to an official of the Association of Natural Rubber Producing Countries.
“Until April, a further tightness in supply is seen due to the seasonal wintering of trees. From May until the year-end, supply will be better,” said Mr Jom Jacob, senior economist of the inter-governmental association comprising the 11 countries that produce rubber. During wintering, production of natural rubber drops.
In his presentation on ‘Rubber Outlook' at the India Rubber Expo 2011, Mr Jacob said rubber supply is expected to increase lower than five per cent this. “Even this is on the assumption that the weather will be normal and uprooting of aged trees will be low,” he said.
Production by the association members is expected to increase to a maximum of 9.87 million tonnes (mt), up 4.8 per cent from last year. This is in the event that the annual uprooting of rubber trees is at two per cent of the total area under cultivation.
Rubber trees begin yielding from the sixth year onwards; the yield peaks between 10 and 19 years before dropping again. Growers usually tend to replace trees that are older than 30 years.
Giving reasons for the lower increase in production this year, Mr Jacob said due to low planting in 2004, only 0.233 million hectare that is equivalent to 3.3 per cent of the yielding area last year, will be available for tapping this year.
“Moreover, high prices have prompted farmers to retain aged trees, postponing replantation in the last two years. Over-ageing trees and a further decline in yield may sometimes prompt farmers to uproot the trees in 2011,” he said.
In November last year, trees on 16,000 hectares were lost due to heavy winds and floods in Thailand. However, the yielding area expanded as growers tapped dormant trees last year. But the possibility of bringing more areas with dormant trees into production is limited.
Rising labour costs and the possibility of a correction in prices could prompt farmers to keep the trees idle, Mr Jacob said.
The improvement in average yield would be marginal as farmers have already exploited their available short-term means on the heels of high prices. The existing yielding area is dominated by trees planted in the 1980s and the productivity of these trees would have dropped drastically on account of ageing.
“There could be possible damage to yield potential due to unscientific over-exploitation of trees prompted by high prices,” he said, adding that abnormally high prices have made retaining low-yielding aged trees economically viable. For example, if the price of rubber was $2 in 2007 and the yield of a 30-year-od tree was 1,100 kg a hectare, a grower would have got $2,200. This year, even if the yield were to drop to 500 tonnes at around $5 a kg, the grower would only get a return of $2,500.
Besides, the influence of non-traditional regions where productivity potential is lower is increasing. This is because farmers in those regions are new to rubber cultivation.
“Economic recovery and the resultant non-farm employment opportunities can aggravate an already severe shortage of skilled tappers,” Mr Jacob said.
Scope for a rise in supply from next year onwards is better with new plantings being ready for tapping.
Sheet rubber hits Rs 227/kg on short covering
Kottayam, Jan. 19
Spot rubber prices increased to a new high on Wednesday. The market firmed up further on fresh buying and short covering following the sharp gains in the domestic and international futures. Meanwhile, in the global market the key Tokyo and Shanghai rubber futures hit all-time highs amidst supply concerns and strong demand.
According to reports, TOCOM could hit ¥500 shortly as the start of the wintering season in major producing countries could reduce output.
While the rise in rubber prices cheers the producing sector as a whole, small industries based on the raw material are struggling to survive. At the same time, growers are suffering due to the shortage of skilled tappers since youngsters are not interested to join the profession. The unexpected and intermittent changes in weather have been another challenge faced by them during the season.
Sheet rubber closed firm at Rs 227 (225) a kg, according to dealers. The grade increased to Rs 228 (225) a kg, as quoted by the Rubber Board.
FUTURES IMPROVE
The February series improved to Rs 234.70 (231.61), March to Rs 240.70 (236.76), April to Rs 249.79 (245.08) and May to Rs 255.75 (250.36) a kg for RSS 4 on the National Multi Commodity Exchange.
RSS 3 (spot) slipped to Rs 252.28 (252.78) a kg at Bangkok. The January futures for the grade flared up to ¥465 (Rs 256.77) from ¥452.8 a kg during the day session but then remained inactive in the night session on the Tokyo Commodity Exchange (TOCOM).
Spot rates were (Rs/kg): RSS-4: 227 (225); RSS-5: 220 (218); ungraded: 211 (208); ISNR 20: 223 (220) and latex 60 per cent: 153 (152.50).
Short supply fears in rubber overriding price rise
Rubber product manufacturers are concerned more about availability than price, said Mr Vinod T. Simon, President, All-India Rubber Industries Association.
Addressing the media on the sidelines of the launching ceremony of India Rubber Expo 2011, he said though the rubber price is going up steeply, availability of the raw material is a bigger issue.
Shortage looming
“There was a supply gap of 0.5 tonnes in 2009-10. Though the country produces 8.5 lakh tonnes of rubber annually, the demand was nine lakh tonnes. Triggered by the country's growing auto sector, the demand is expected to go up to 9.5 lakh tonnes in 2010-11, thereby widening the gap to 1 lakh tonnes that needs to be bridged through imports.
“At this rate, India will face a shortage of at least five lakh tonnes of rubber by 2015,” he said.
Duty cut
However, he said the Government's recent announcement on duty cut (to 8 per cent from 20 per cent earlier) came as a breather.
Talking on the expo, which was inaugurated by the Governor of Maharashtra, Mr K. Sankaranarayanan, here on Wednesday, he said this year it is spread over 15,000 sq.mt with over 300 participating companies from India and around the world.
And the organisers expect over 20,000 visitors from over 30 countries.
About 40 eminent rubber technologists, scientists and experts from the rubber industry – Indian and international, will speak at the conference sessions on current global situation of natural and synthetic rubbers, likely trends in the future and action already in place.
A buyer-seller meet has also been organised along with CAPEXIL, which is expected to bring together at least 30 international buyers and sellers, Mr Simon said
Rubber user industry in a dilemma over imports
Chennai, Jan. 19
The natural rubber user industry finds itself in a dilemma to import 40,000 tonnes of the commodity before March 31 at a concessional Customs duty of 7.5 per cent.
“Prices in the global market are higher than the domestic price by at least Rs 25 a kg. This is a tricky issue as far as imports are concerned,” said Mr Rajiv Budhraja, Director-General of the Automotive Tyre Manufacturers' Association, on the sidelines of the India Rubber Expo 2011.
Last month, the Centre gave its nod for the import of 40,000 tonnes of rubber under the tariff rate quota at concessional duty as part of its plan to keep a lid on rising domestic prices. The normal duty for rubber imports is 20 per cent.
On Monday, the Directorate-General of Foreign Trade issued guidelines for import and it will mainly depend on the consumption during 2008-09 by each unit. The usage has to be certified by the Rubber Board. The registration for imports began on Tuesday and will end on January 24.
Spiking prices
On Wednesday, prices for ribbed smoked sheet (RSS) 4 grade rubber hit a record Rs 227 a kg. In contrast, the comparable RSS 3 grade in the global market ended at Rs 252.08 a kg.
“Price apart, the problem will be finding rubber in February. From February to April, it is wintering season,” said Mr Budhraja.
Wintering season
Wintering season is generally a period of low production.
Rubber prices globally heat up on rising demand and lower supply. Rubber production was up a meagre five per cent at 10.7 million tonnes in 2010.
In India, projections for production during the current fiscal have been pruned to 8.51 lakh tonnes from initial estimates of 8.93 lakh tonnes as output was affected during September-October, said Mr Toms Joseph, Deputy Director (Economic Research) of the Rubber Board, during a session on Rubber Outlook at the expo.
Crude oil prices
The rise in crude oil prices is also influencing the rise in natural rubber prices. This is because synthetic rubber, the substitute for natural rubber, is derived from petroleum products.
Kottayam, Jan. 20
Spot rubber hit another all-time high on Thursday. The market improved on fresh buying and short covering catalyzed by the sharp gain in Bangkok spot price. According to analysts, the prices were set to explore further highs as supply concerns continued to lead the market to unforeseen levels in anticipation of more purchases from tyre makers.
The small scale industries using rubber as raw material are put to severe hardships and 30 per cent of them have all ready downed shutters, said the Kerala Small Scale Industries Association.
If effective steps are not taken to overcome the present crisis, the entire small units in Kerala will have to be closed down, according to Dr. T.C. Joseph, District President.
Sheet rubber increased to Rs 229.50 (227.00) a kg according to traders. The grade firmed up to Rs 230 (228) a kg, according to the Rubber Board.
FUTURES IMPROVE
RSS 4 improved further with February contracts rising to Rs 238.90 (234.40), March to Rs 245.15 (240.26), April to Rs 253.99 (249.30) and May to Rs 260 (255.68) a kg for on the National Multi Commodity Exchange.
RSS 3 (spot) flared up to Rs 257.73 (252.28) a kg at Bangkok. Its January futures slipped to ¥464.1 (Rs 257.04) from ¥465 a kg during the day session but then bounced back to ¥466.5 (Rs 258.38) in the night session on the Tokyo Commodity Exchange.
Spot rates were (Rs/kg): RSS-4: 229.50 (227); RSS-5: 223 (220); ungraded: 215 (211); ISNR 20: 224 (223) and latex 60 per cent: 155 (153).
Natural rubber prices will remain firm till April
Production likely to rise less than 5% this year.
The bullish trend in natural rubber prices could continue at least till April due to the tight supply situation, according to an official of the Association of Natural Rubber Producing Countries.
“Until April, a further tightness in supply is seen due to the seasonal wintering of trees. From May until the year-end, supply will be better,” said Mr Jom Jacob, senior economist of the inter-governmental association comprising the 11 countries that produce rubber. During wintering, production of natural rubber drops.
In his presentation on ‘Rubber Outlook' at the India Rubber Expo 2011, Mr Jacob said rubber supply is expected to increase lower than five per cent this. “Even this is on the assumption that the weather will be normal and uprooting of aged trees will be low,” he said.
Production by the association members is expected to increase to a maximum of 9.87 million tonnes (mt), up 4.8 per cent from last year. This is in the event that the annual uprooting of rubber trees is at two per cent of the total area under cultivation.
Rubber trees begin yielding from the sixth year onwards; the yield peaks between 10 and 19 years before dropping again. Growers usually tend to replace trees that are older than 30 years.
Giving reasons for the lower increase in production this year, Mr Jacob said due to low planting in 2004, only 0.233 million hectare that is equivalent to 3.3 per cent of the yielding area last year, will be available for tapping this year.
“Moreover, high prices have prompted farmers to retain aged trees, postponing replantation in the last two years. Over-ageing trees and a further decline in yield may sometimes prompt farmers to uproot the trees in 2011,” he said.
In November last year, trees on 16,000 hectares were lost due to heavy winds and floods in Thailand. However, the yielding area expanded as growers tapped dormant trees last year. But the possibility of bringing more areas with dormant trees into production is limited.
Rising labour costs and the possibility of a correction in prices could prompt farmers to keep the trees idle, Mr Jacob said.
The improvement in average yield would be marginal as farmers have already exploited their available short-term means on the heels of high prices. The existing yielding area is dominated by trees planted in the 1980s and the productivity of these trees would have dropped drastically on account of ageing.
“There could be possible damage to yield potential due to unscientific over-exploitation of trees prompted by high prices,” he said, adding that abnormally high prices have made retaining low-yielding aged trees economically viable. For example, if the price of rubber was $2 in 2007 and the yield of a 30-year-od tree was 1,100 kg a hectare, a grower would have got $2,200. This year, even if the yield were to drop to 500 tonnes at around $5 a kg, the grower would only get a return of $2,500.
Besides, the influence of non-traditional regions where productivity potential is lower is increasing. This is because farmers in those regions are new to rubber cultivation.
“Economic recovery and the resultant non-farm employment opportunities can aggravate an already severe shortage of skilled tappers,” Mr Jacob said.
Scope for a rise in supply from next year onwards is better with new plantings being ready for tapping.
Sheet rubber hits Rs 227/kg on short covering
Kottayam, Jan. 19
Spot rubber prices increased to a new high on Wednesday. The market firmed up further on fresh buying and short covering following the sharp gains in the domestic and international futures. Meanwhile, in the global market the key Tokyo and Shanghai rubber futures hit all-time highs amidst supply concerns and strong demand.
According to reports, TOCOM could hit ¥500 shortly as the start of the wintering season in major producing countries could reduce output.
While the rise in rubber prices cheers the producing sector as a whole, small industries based on the raw material are struggling to survive. At the same time, growers are suffering due to the shortage of skilled tappers since youngsters are not interested to join the profession. The unexpected and intermittent changes in weather have been another challenge faced by them during the season.
Sheet rubber closed firm at Rs 227 (225) a kg, according to dealers. The grade increased to Rs 228 (225) a kg, as quoted by the Rubber Board.
FUTURES IMPROVE
The February series improved to Rs 234.70 (231.61), March to Rs 240.70 (236.76), April to Rs 249.79 (245.08) and May to Rs 255.75 (250.36) a kg for RSS 4 on the National Multi Commodity Exchange.
RSS 3 (spot) slipped to Rs 252.28 (252.78) a kg at Bangkok. The January futures for the grade flared up to ¥465 (Rs 256.77) from ¥452.8 a kg during the day session but then remained inactive in the night session on the Tokyo Commodity Exchange (TOCOM).
Spot rates were (Rs/kg): RSS-4: 227 (225); RSS-5: 220 (218); ungraded: 211 (208); ISNR 20: 223 (220) and latex 60 per cent: 153 (152.50).
Short supply fears in rubber overriding price rise
Rubber product manufacturers are concerned more about availability than price, said Mr Vinod T. Simon, President, All-India Rubber Industries Association.
Addressing the media on the sidelines of the launching ceremony of India Rubber Expo 2011, he said though the rubber price is going up steeply, availability of the raw material is a bigger issue.
Shortage looming
“There was a supply gap of 0.5 tonnes in 2009-10. Though the country produces 8.5 lakh tonnes of rubber annually, the demand was nine lakh tonnes. Triggered by the country's growing auto sector, the demand is expected to go up to 9.5 lakh tonnes in 2010-11, thereby widening the gap to 1 lakh tonnes that needs to be bridged through imports.
“At this rate, India will face a shortage of at least five lakh tonnes of rubber by 2015,” he said.
Duty cut
However, he said the Government's recent announcement on duty cut (to 8 per cent from 20 per cent earlier) came as a breather.
Talking on the expo, which was inaugurated by the Governor of Maharashtra, Mr K. Sankaranarayanan, here on Wednesday, he said this year it is spread over 15,000 sq.mt with over 300 participating companies from India and around the world.
And the organisers expect over 20,000 visitors from over 30 countries.
About 40 eminent rubber technologists, scientists and experts from the rubber industry – Indian and international, will speak at the conference sessions on current global situation of natural and synthetic rubbers, likely trends in the future and action already in place.
A buyer-seller meet has also been organised along with CAPEXIL, which is expected to bring together at least 30 international buyers and sellers, Mr Simon said
Rubber user industry in a dilemma over imports
Chennai, Jan. 19
The natural rubber user industry finds itself in a dilemma to import 40,000 tonnes of the commodity before March 31 at a concessional Customs duty of 7.5 per cent.
“Prices in the global market are higher than the domestic price by at least Rs 25 a kg. This is a tricky issue as far as imports are concerned,” said Mr Rajiv Budhraja, Director-General of the Automotive Tyre Manufacturers' Association, on the sidelines of the India Rubber Expo 2011.
Last month, the Centre gave its nod for the import of 40,000 tonnes of rubber under the tariff rate quota at concessional duty as part of its plan to keep a lid on rising domestic prices. The normal duty for rubber imports is 20 per cent.
On Monday, the Directorate-General of Foreign Trade issued guidelines for import and it will mainly depend on the consumption during 2008-09 by each unit. The usage has to be certified by the Rubber Board. The registration for imports began on Tuesday and will end on January 24.
Spiking prices
On Wednesday, prices for ribbed smoked sheet (RSS) 4 grade rubber hit a record Rs 227 a kg. In contrast, the comparable RSS 3 grade in the global market ended at Rs 252.08 a kg.
“Price apart, the problem will be finding rubber in February. From February to April, it is wintering season,” said Mr Budhraja.
Wintering season
Wintering season is generally a period of low production.
Rubber prices globally heat up on rising demand and lower supply. Rubber production was up a meagre five per cent at 10.7 million tonnes in 2010.
In India, projections for production during the current fiscal have been pruned to 8.51 lakh tonnes from initial estimates of 8.93 lakh tonnes as output was affected during September-October, said Mr Toms Joseph, Deputy Director (Economic Research) of the Rubber Board, during a session on Rubber Outlook at the expo.
Crude oil prices
The rise in crude oil prices is also influencing the rise in natural rubber prices. This is because synthetic rubber, the substitute for natural rubber, is derived from petroleum products.
Thursday, January 20, 2011
Short supply fears in rubber overriding price rise
Short supply fears in rubber overriding price rise
Demand shortage seen at 5 lakh tonnes by 2015.
Chennai, Jan. 19
Rubber product manufacturers are concerned more about availability than price, said Mr Vinod T. Simon, President, All-India Rubber Industries Association.
Addressing the media on the sidelines of the launching ceremony of India Rubber Expo 2011, he said though the rubber price is going up steeply, availability of the raw material is a bigger issue.
Shortage looming
“There was a supply gap of 0.5 tonnes in 2009-10. Though the country produces 8.5 lakh tonnes of rubber annually, the demand was nine lakh tonnes. Triggered by the country's growing auto sector, the demand is expected to go up to 9.5 lakh tonnes in 2010-11, thereby widening the gap to 1 lakh tonnes that needs to be bridged through imports.
“At this rate, India will face a shortage of at least five lakh tonnes of rubber by 2015,” he said.
Duty cut
However, he said the Government's recent announcement on duty cut (to 8 per cent from 20 per cent earlier) came as a breather.
Talking on the expo, which was inaugurated by the Governor of Maharashtra, Mr K. Sankaranarayanan, here on Wednesday, he said this year it is spread over 15,000 sq.mt with over 300 participating companies from India and around the world.
And the organisers expect over 20,000 visitors from over 30 countries.
About 40 eminent rubber technologists, scientists and experts from the rubber industry – Indian and international, will speak at the conference sessions on current global situation of natural and synthetic rubbers, likely trends in the future and action already in place.
A buyer-seller meet has also been organised along with CAPEXIL, which is expected to bring together at least 30 international buyers and sellers, Mr Simon said.
Sheet rubber hits Rs 227/kg on short covering
Kottayam, Jan. 19
Spot rubber prices increased to a new high on Wednesday. The market firmed up further on fresh buying and short covering following the sharp gains in the domestic and international futures. Meanwhile, in the global market the key Tokyo and Shanghai rubber futures hit all-time highs amidst supply concerns and strong demand.
According to reports, TOCOM could hit ¥500 shortly as the start of the wintering season in major producing countries could reduce output.
While the rise in rubber prices cheers the producing sector as a whole, small industries based on the raw material are struggling to survive. At the same time, growers are suffering due to the shortage of skilled tappers since youngsters are not interested to join the profession. The unexpected and intermittent changes in weather have been another challenge faced by them during the season.
Sheet rubber closed firm at Rs 227 (225) a kg, according to dealers. The grade increased to Rs 228 (225) a kg, as quoted by the Rubber Board.
FUTURES IMPROVE
The February series improved to Rs 234.70 (231.61), March to Rs 240.70 (236.76), April to Rs 249.79 (245.08) and May to Rs 255.75 (250.36) a kg for RSS 4 on the National Multi Commodity Exchange.
RSS 3 (spot) slipped to Rs 252.28 (252.78) a kg at Bangkok. The January futures for the grade flared up to ¥465 (Rs 256.77) from ¥452.8 a kg during the day session but then remained inactive in the night session on the Tokyo Commodity Exchange (TOCOM).
Spot rates were (Rs/kg): RSS-4: 227 (225); RSS-5: 220 (218); ungraded: 211 (208); ISNR 20: 223 (220) and latex 60 per cent: 153 (152.50).
Govt notifies 40,000-t rubber import at 7.5% duty; industry not enthused
KOCHI: The government’s notification inviting applications for the import of natural rubber under tariff rate quota has come at a time when international prices are at a record high. Saying that the imports are not practical at a time when prices and availability are not favourable, user industries have called for a complete waiver of customs duty on rubber.
The scheme allows for the import of 40,000 tonne at a reduced duty rate of 7.5% before March 31, 2011. The notification dated January 17, 2011 has invited applications from actual users till March 24.
In a letter to the Union Commerce Ministry, the Automotive Tyre Manufacturers Association’s chairman Neeraj Kanwar said the “tyre industry is faced with the unprecedented and difficult situation of uncertainty in sourcing natural rubber to meet the growing demand for tyres arising from the high growth in the automotive segment”.
ATMA has also requested the government to allow duty-free import of 200,000 tonne in the next one year.
Earlier, taking into account the lack of availability and a sharp increase in the prices of natural rubber in the domestic market, the user industries had approached the government for a reduction in the customs duty to 7.5 % and a permission for duty-free import of 2 lakh tonne on priority. A government-appointed committee that studied the issue recommended a cap on import duty at 20% or `20 per kg, whichever is lower.
It is in this context that the government has allowed an import of 40,000 tonne at 7.5% duty. It has decided to cap the duty at 20% or `20 per kg, whichever is lower, from April, 2011. However, the notification has come at a time when international prices are at `252.78 per kg. The domestic prices are at `225 per kg as on Tuesday.
International prices have been rising on account of the unfavourable weather conditions in major rubber producing countries. The tight supply conditions prevailing in these markets have caused a sharp escalation in prices. Speaking to ET, CPM Spices Corporation Proprietor Biju John said the news that India would be going to import has led to a further rise in international prices.
Cochin Rubber Merchants Association’s President N Radhakrishnan said the domestic prices might shoot up if the industry was not importing. “There is a supply shortfall of 85,000 tonne to 100,000 tonne in the current fiscal,” he pointed out. “The industry can meet this shortfall by importing small lots from different countries,” he added.
SIPH Says Rubber Demand To Stay Strong
French-listed natural rubber group SIPH expects rubber demand to remain strong in 2011 thanks partly to healthy appetite in emerging countries such as China and India, its deputy chief executive told Reuters.
SIPH, in which tyre giant Michelin holds a 20 percent stake, should see rubber production increase gradually from 2013, Olivier de Saint-Seine said in an interview on Monday (January 17).
With crude oil prices heading towards $100 a barrel and other raw materials prices surging to record highs, key Tokyo rubber futures hit a new peak on Monday (January 17). Traders expect further gains on mounting concerns over supply tightness.
"We are not expecting world production to rise very sharply. Demand is strong globally, essentially in emerging countries like China or India but also in Europe and in the U.S.", Saint-Seine said.
The group supplies clients including Japan's Bridgestone and Germany's Continental and has plantations and industrial sites in Nigeria, Ghana, Liberia and Ivory Coast.
SIPH's Ivory Coast business was operating as usual despite a post-election leadership crisis that has claimed the lives of almost 250 people according to the United Nations. "We are very vigilant and we know how to adapt," Saint-Seine said. "As of now, operations in this country are running normally."
SIPH, which stands for Societe Internationale de Plantations d'Heveas, produces and distributes natural rubber obtained from the latex of Hevea trees.
Shares of SIPH rose nearly 81 percent in 2010 on the back of a sharp rise in rubber prices and are up almost 31 percent since Jan. 1, giving it a market value of around 550 million euros ($732 million).
SIPH production amounted to around 130,000 tonnes in 2010 -- compared with the estimated 10 million tonnes produced in the world annually -- and should be stable this year before increasing gradually from 2013 as the group hopes fresh plantations will start producing latex, Saint-Seine said.
The executive said SIPH would reinforce its presence in west Africa but that it would study potential acquisitions anywhere if opportunities arose.
"We do not rule out looking in the direction of Asia," Saint-Seine said.
Thailand and Indonesia are the two main producers of natural rubber.
Natural rubber prices at record high
New Delhi, Jan 18 (PTI) Natural rubber prices continued to remain at record Rs 225 per kg on strong global cues.
Prices of natural rubber, a key component for making tyres today closed at Rs 225 per kg in Kottayam and Kochi, which accounts for 90 per cent of the country''s production.
According to industry sources, the rally in natural rubber prices is due to the surge in prices of the commodity in the international market.
Natural rubber prices in the global market touched a fresh high of Rs 247.3 per kg as strong demand from China and the US is fuelling the prices of the commodity.
"International prices are at record high level and are likely to remain at that level in near future due to strong demand," Indian Rubber Dealers Federation Treasurer Ibrahim Jalal said.
Domestic prices are following the international trend, he added.
A surge in demand from the US on the back of better-than-expected growth in the automotive segment is further pushing the global prices of the commodity and the impact is also felt on the domestic market, said an expert.
However, the present rally in the prices of commodity is due to the global cues as the supply situation in the country has improved, Jalal said.
India''s production of natural rubber in 2010 is estimated at around 8.5 lakh tonnes, whereas the total demand for natural rubber in the country is nearly 10 lakh tonnes per annum.
India tyre body demands lifting of import tax
MUMBAI (Commodity Online) : The tyre industry in India has called for lifting of government duties on Natural Rubber at least for the next one year in the context of surging rubber prices.
Currently, a customs duty of 7.5% is levied on rubber even as rubber prices continue to maintain Rs.220 a kg.
The exhortation comes from the Automotive Tyre Manufacturers Association (Atma) whose Chairman Neeraj Kanwar shot a letter to Commerce Secretary Rahul Khullar asking for duty-free import of 200,000 tons of natural rubber over the next one year. This is currently the demand-supply gap of rubber in India.
Meanwhile, rubber advanced to a record high in Tokyo and Shanghai when purchasers accelerated the procurement of rubber on supply-side concerns.
Currently it is leaf-shedding season for rubber in Thailand and production is expected to come down by 45% to 60% when contrasted with peak seasonal output.
Demand from India and China in the automotive sector also add to price surge. Rubber has advanced 12% this January adding to the rally of 50% past year.
The June-delivery contract surged 2.9 % to touch 466.3 yen a kilogram ($5,668 a metric ton) before finally being traded at 466.1 yen on the Tokyo Commodity Exchange at 1:41 p.m.
Natural-rubber inventories in China decreased by 175 tons to reach 68,675 tons, as per a survey carried out by the Shanghai Futures Exchange on Jan. 14 of 10 warehouses. The inventory figure is 55% lower YOY.
Demand shortage seen at 5 lakh tonnes by 2015.
Chennai, Jan. 19
Rubber product manufacturers are concerned more about availability than price, said Mr Vinod T. Simon, President, All-India Rubber Industries Association.
Addressing the media on the sidelines of the launching ceremony of India Rubber Expo 2011, he said though the rubber price is going up steeply, availability of the raw material is a bigger issue.
Shortage looming
“There was a supply gap of 0.5 tonnes in 2009-10. Though the country produces 8.5 lakh tonnes of rubber annually, the demand was nine lakh tonnes. Triggered by the country's growing auto sector, the demand is expected to go up to 9.5 lakh tonnes in 2010-11, thereby widening the gap to 1 lakh tonnes that needs to be bridged through imports.
“At this rate, India will face a shortage of at least five lakh tonnes of rubber by 2015,” he said.
Duty cut
However, he said the Government's recent announcement on duty cut (to 8 per cent from 20 per cent earlier) came as a breather.
Talking on the expo, which was inaugurated by the Governor of Maharashtra, Mr K. Sankaranarayanan, here on Wednesday, he said this year it is spread over 15,000 sq.mt with over 300 participating companies from India and around the world.
And the organisers expect over 20,000 visitors from over 30 countries.
About 40 eminent rubber technologists, scientists and experts from the rubber industry – Indian and international, will speak at the conference sessions on current global situation of natural and synthetic rubbers, likely trends in the future and action already in place.
A buyer-seller meet has also been organised along with CAPEXIL, which is expected to bring together at least 30 international buyers and sellers, Mr Simon said.
Sheet rubber hits Rs 227/kg on short covering
Kottayam, Jan. 19
Spot rubber prices increased to a new high on Wednesday. The market firmed up further on fresh buying and short covering following the sharp gains in the domestic and international futures. Meanwhile, in the global market the key Tokyo and Shanghai rubber futures hit all-time highs amidst supply concerns and strong demand.
According to reports, TOCOM could hit ¥500 shortly as the start of the wintering season in major producing countries could reduce output.
While the rise in rubber prices cheers the producing sector as a whole, small industries based on the raw material are struggling to survive. At the same time, growers are suffering due to the shortage of skilled tappers since youngsters are not interested to join the profession. The unexpected and intermittent changes in weather have been another challenge faced by them during the season.
Sheet rubber closed firm at Rs 227 (225) a kg, according to dealers. The grade increased to Rs 228 (225) a kg, as quoted by the Rubber Board.
FUTURES IMPROVE
The February series improved to Rs 234.70 (231.61), March to Rs 240.70 (236.76), April to Rs 249.79 (245.08) and May to Rs 255.75 (250.36) a kg for RSS 4 on the National Multi Commodity Exchange.
RSS 3 (spot) slipped to Rs 252.28 (252.78) a kg at Bangkok. The January futures for the grade flared up to ¥465 (Rs 256.77) from ¥452.8 a kg during the day session but then remained inactive in the night session on the Tokyo Commodity Exchange (TOCOM).
Spot rates were (Rs/kg): RSS-4: 227 (225); RSS-5: 220 (218); ungraded: 211 (208); ISNR 20: 223 (220) and latex 60 per cent: 153 (152.50).
Govt notifies 40,000-t rubber import at 7.5% duty; industry not enthused
KOCHI: The government’s notification inviting applications for the import of natural rubber under tariff rate quota has come at a time when international prices are at a record high. Saying that the imports are not practical at a time when prices and availability are not favourable, user industries have called for a complete waiver of customs duty on rubber.
The scheme allows for the import of 40,000 tonne at a reduced duty rate of 7.5% before March 31, 2011. The notification dated January 17, 2011 has invited applications from actual users till March 24.
In a letter to the Union Commerce Ministry, the Automotive Tyre Manufacturers Association’s chairman Neeraj Kanwar said the “tyre industry is faced with the unprecedented and difficult situation of uncertainty in sourcing natural rubber to meet the growing demand for tyres arising from the high growth in the automotive segment”.
ATMA has also requested the government to allow duty-free import of 200,000 tonne in the next one year.
Earlier, taking into account the lack of availability and a sharp increase in the prices of natural rubber in the domestic market, the user industries had approached the government for a reduction in the customs duty to 7.5 % and a permission for duty-free import of 2 lakh tonne on priority. A government-appointed committee that studied the issue recommended a cap on import duty at 20% or `20 per kg, whichever is lower.
It is in this context that the government has allowed an import of 40,000 tonne at 7.5% duty. It has decided to cap the duty at 20% or `20 per kg, whichever is lower, from April, 2011. However, the notification has come at a time when international prices are at `252.78 per kg. The domestic prices are at `225 per kg as on Tuesday.
International prices have been rising on account of the unfavourable weather conditions in major rubber producing countries. The tight supply conditions prevailing in these markets have caused a sharp escalation in prices. Speaking to ET, CPM Spices Corporation Proprietor Biju John said the news that India would be going to import has led to a further rise in international prices.
Cochin Rubber Merchants Association’s President N Radhakrishnan said the domestic prices might shoot up if the industry was not importing. “There is a supply shortfall of 85,000 tonne to 100,000 tonne in the current fiscal,” he pointed out. “The industry can meet this shortfall by importing small lots from different countries,” he added.
SIPH Says Rubber Demand To Stay Strong
French-listed natural rubber group SIPH expects rubber demand to remain strong in 2011 thanks partly to healthy appetite in emerging countries such as China and India, its deputy chief executive told Reuters.
SIPH, in which tyre giant Michelin holds a 20 percent stake, should see rubber production increase gradually from 2013, Olivier de Saint-Seine said in an interview on Monday (January 17).
With crude oil prices heading towards $100 a barrel and other raw materials prices surging to record highs, key Tokyo rubber futures hit a new peak on Monday (January 17). Traders expect further gains on mounting concerns over supply tightness.
"We are not expecting world production to rise very sharply. Demand is strong globally, essentially in emerging countries like China or India but also in Europe and in the U.S.", Saint-Seine said.
The group supplies clients including Japan's Bridgestone and Germany's Continental and has plantations and industrial sites in Nigeria, Ghana, Liberia and Ivory Coast.
SIPH's Ivory Coast business was operating as usual despite a post-election leadership crisis that has claimed the lives of almost 250 people according to the United Nations. "We are very vigilant and we know how to adapt," Saint-Seine said. "As of now, operations in this country are running normally."
SIPH, which stands for Societe Internationale de Plantations d'Heveas, produces and distributes natural rubber obtained from the latex of Hevea trees.
Shares of SIPH rose nearly 81 percent in 2010 on the back of a sharp rise in rubber prices and are up almost 31 percent since Jan. 1, giving it a market value of around 550 million euros ($732 million).
SIPH production amounted to around 130,000 tonnes in 2010 -- compared with the estimated 10 million tonnes produced in the world annually -- and should be stable this year before increasing gradually from 2013 as the group hopes fresh plantations will start producing latex, Saint-Seine said.
The executive said SIPH would reinforce its presence in west Africa but that it would study potential acquisitions anywhere if opportunities arose.
"We do not rule out looking in the direction of Asia," Saint-Seine said.
Thailand and Indonesia are the two main producers of natural rubber.
Natural rubber prices at record high
New Delhi, Jan 18 (PTI) Natural rubber prices continued to remain at record Rs 225 per kg on strong global cues.
Prices of natural rubber, a key component for making tyres today closed at Rs 225 per kg in Kottayam and Kochi, which accounts for 90 per cent of the country''s production.
According to industry sources, the rally in natural rubber prices is due to the surge in prices of the commodity in the international market.
Natural rubber prices in the global market touched a fresh high of Rs 247.3 per kg as strong demand from China and the US is fuelling the prices of the commodity.
"International prices are at record high level and are likely to remain at that level in near future due to strong demand," Indian Rubber Dealers Federation Treasurer Ibrahim Jalal said.
Domestic prices are following the international trend, he added.
A surge in demand from the US on the back of better-than-expected growth in the automotive segment is further pushing the global prices of the commodity and the impact is also felt on the domestic market, said an expert.
However, the present rally in the prices of commodity is due to the global cues as the supply situation in the country has improved, Jalal said.
India''s production of natural rubber in 2010 is estimated at around 8.5 lakh tonnes, whereas the total demand for natural rubber in the country is nearly 10 lakh tonnes per annum.
India tyre body demands lifting of import tax
MUMBAI (Commodity Online) : The tyre industry in India has called for lifting of government duties on Natural Rubber at least for the next one year in the context of surging rubber prices.
Currently, a customs duty of 7.5% is levied on rubber even as rubber prices continue to maintain Rs.220 a kg.
The exhortation comes from the Automotive Tyre Manufacturers Association (Atma) whose Chairman Neeraj Kanwar shot a letter to Commerce Secretary Rahul Khullar asking for duty-free import of 200,000 tons of natural rubber over the next one year. This is currently the demand-supply gap of rubber in India.
Meanwhile, rubber advanced to a record high in Tokyo and Shanghai when purchasers accelerated the procurement of rubber on supply-side concerns.
Currently it is leaf-shedding season for rubber in Thailand and production is expected to come down by 45% to 60% when contrasted with peak seasonal output.
Demand from India and China in the automotive sector also add to price surge. Rubber has advanced 12% this January adding to the rally of 50% past year.
The June-delivery contract surged 2.9 % to touch 466.3 yen a kilogram ($5,668 a metric ton) before finally being traded at 466.1 yen on the Tokyo Commodity Exchange at 1:41 p.m.
Natural-rubber inventories in China decreased by 175 tons to reach 68,675 tons, as per a survey carried out by the Shanghai Futures Exchange on Jan. 14 of 10 warehouses. The inventory figure is 55% lower YOY.
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