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