Spot rubber zooms to new high

Spot rubber zooms to new high


Kottayam, Jan. 5

Domestic rubber prices explored further highs on Wednesday. The market continued its upward journey on supply concerns and gains in trend setting international markets. On the spot, prices ruled firm, following the bullish mood on the National Multi Commodity Exchange (NMCE).

“The present price hike is the true reflection of the international situation. The price can be said as neither high nor low,” Adv. Joy Nadukkara, Ex. MP and President, Meenachil Rubber Marketing and Processing Cooperative Society said. “In all other producing countries, the price situation is almost the same. It is not a phenomenon peculiar to India. Our production is also not satisfactory commensurate with the total rubber area available. It ought to have been much higher. Climatic change is also yet another set back to bring down the production,” he said.

Sheet rubber firmed up to Rs 212 (210) a kg, according to traders. The grade increased to Rs 210.50 (209.50) a kg both at Kottayam and Kochi, according to the official Web site of the Rubber Board.

The January series improved to Rs 214.26 (212.37), February to Rs 221.67 (218.88), March to Rs 226.75 (223.52) and April to Rs 233.05 (230.23) a kg for RSS 4 on the NMCE.

RSS 3 (spot) flared up to Rs 230.94 (226.39) a kg at Bangkok. The grade improved further at its January futures to ¥419 (Rs 231.06) from ¥416 a kg during the day session and then to ¥422.4 (Rs 232.97) in the night session on the Tokyo Commodity Exchange.

Spot rates were (Rs/kg): RSS-4: 212 (210); RSS-5: 202 (201); ungraded: 198 (197); ISNR 20: 208 (207) and latex 60 per cent 143 (142).


Tyre makers buy rubber at record $4.69 per kg
(Reuters) - Indian tyre makers bought natural rubber at a record 212 rupees ($4.69) per kg on Wednesday as sellers raised prices after a surge in the international markets, head of a dealers body told Reuters.
Tyre makers were struggling to secure required supplies as dealers were diverting stocks into warehouses and many farmers were also holding their stocks, expecting a further rise in prices, George Valy, president of the Indian Rubber Dealers Federation, said.
"Everyday, farmers and dealers are quoting higher prices due to rising prices in international market. In Thailand rubber is more expensive than the local markets," Valy said.
Spot rubber price in Thailand, the world's biggest producer and exporter of natural rubber, rose by $0.10 to $ 5.15 per kg.
The stocks at accredited warehouses of National Multi-Commodity Exchange (NMCE) more than doubled in a month to 7,156 tonnes, data with the exchange showed.
On Wednesday, the far-month April rubber contract on NMCE was trading nearly 18 rupees per kg higher than the near-month January contract , prompting dealers to hold stocks.
"Tyre companies can wait for a day or two, but they have no option as normally no-one keeps inventory of rubber for more than 10-12 days. Whatever is the price one has to buy it," A.S. Mehta, director marketing at JK Tyre, said.
India's natural rubber output in December edged up by 0.6 percent to 101,500 tonnes as favourable weather allowed farmers to increase tapping, the state-run Rubber Board said in a statement on Monday.
"Weather is very favourable for tapping. In January 2011 production would be higher than January 2010, but we have to see how much production comes in to the market," Valy said.
The world's fourth-largest producer last month cut import duty on natural rubber to 7.5 percent for shipments up to 40,000 tonnes until March 31.
Shares of top Indian tyre-makers like JK Tyres, Apollo Tyres, Ceat and MRF closed down 1.4-4.7 percent in a weak Mumbai market that closed down nearly 1 percent.
(1$ =45.2 rupees)


Rubber Futures Climb to Record on Thai Supply Concerns Amid Strong Demand

Rubber climbed to an all-time high in Tokyo, reversing an earlier drop, as strong demand increased supply concerns. The cash price in Thailand, the largest supplier, also reached a record.
June-delivery rubber gained as much as 0.7 percent to 429.4 yen a kilogram ($5,230 a metric ton) after falling 1.7 percent on the Tokyo Commodity Exchange. The most-active contract, which jumped 50 percent last year, settled at 428.2 yen.
Latex production in top exporter Thailand is set to shrink as growers will reduce tapping from February to April during the so-called wintering period. The seasonal drop in output may worsen a supply shortage as global demand will keep rising, led by car sales in China and India.
“Investors snapped up rubber after cashing in profits as its fundamentals remain sound,” Sureerat Kunthongjun, an analyst at AGROW Enterprise Ltd., said by phone from Bangkok. “Buyers, especially from China, accelerate purchases ahead of Chinese New Year and wintering season in Thailand,” she said.
The Thai cash price extended a rally to a record 154.55 baht ($5.13) per kilogram as rain limits supply amid strong demand ahead of the low-production period, the Rubber Research Institute of Thailand said on the website today.
The northeast monsoon continues to cover the Gulf of Thailand, causing widespread rain across southern provinces, according to Thai Meteorological Department. Scattered rains are expected in the south in February and March, it said.
Car Sales
The rally was buoyed by a weak yen and double-digit growth of Indian car companies, Anand James, chief analyst at brokerage Geojit Comtrade Ltd., said in an e-mail today.
Maruti Suzuki India Ltd., the nation’s biggest carmaker, sold 99,225 vehicles in December, up 17 percent from a year earlier, the company said in a statement yesterday. December sales of Tata Motors Ltd., India’s biggest truckmaker, surged 30.6 percent to 67,441 units.
General Motors Co., the biggest overseas automaker in China, boosted sales in the country 29 percent last year as government stimulus policies and rising incomes spurred demand.
Sales totaled 2.35 million vehicles, Detroit-based GM said yesterday in an e-mailed statement. The growth rate slowed from 2009, when deliveries surged 67 percent to 1.83 million.
In the U.S., the largest auto market after China, industrywide sales rose to 1.14 million in December from 1.03 million a year earlier, Autodata Corp. said yesterday. The annual total increased to 11.6 million cars and light trucks from 10.4 million in 2009, according to the research firm.
The yen weakened to 82.21 a dollar today, near a one-week low of 82.28 reached yesterday.
May-delivery rubber in Shanghai advanced 1.3 percent to close at 38,100 yuan ($5,754) a ton after falling as much as 1.3 percent. It reached a record 38,920 yuan on Nov. 11.



Rubber exports soar over 89 percent

Vietnam’s rubber export turnover reached US$2.32 billion in 2010, exceeding the target of US$1.5 billion set for the whole year, up 89.1 percent as compared to 2009.
The strong growth was attributable to consecutive increases in rubber prices and the world’s increasing demand due to countries’ industrial recovery and their insufficient reserves.
In the first 11 months of 2010, the average rubber price was over US$2,900 per tonne, representing a year-on-year increase of 82 percent.
In its ten largest markets, except China, Vietnam’s rubber products saw high increases in consumption volumes. India topped the list as it tripled rubber volume from Vietnam as compared to 2009.
According to experts, rubber supplies in Vietnam, Thailand and Malaysia are forecast to drop while demands will continue rising in 2011. These will be important factors leading to increasing rubber prices during the year.
Stephen Evans, General Secretary of the World Rubber Study Group, said that China, the world’s largest rubber importer, will import around 1.75 million tonnes of rubber in 2011, up 3 million tonnes over last year.
However, Vietnam’s rubber exports to China, which consumes 60-70 percent of the Southeast Asian country’s total rubber export volume, are still facing risks and instability as half of Vietnamese exports to China are through borders with “flexible” control policies.
Therefore, to boost the sustainable development of the Vietnamese rubber industry, besides China, businesses should diversify their markets through expanding exports to the US, Germany, the Republic of Korea and former Soviet Union countries, said Dinh Van Tien, Head of the Vietnam Rubber Group’s Import-Export Department.
Domestic rubber producers also need to improve products’ quality and designs, he added.



Field trials of GM rubber need of hour: Jairam Ramesh

NEW DELHI: Environment Minister Jairam Ramesh has sought to allay the apprehensions raised by the Kerala government about his decision to allow field trials of genetically modified rubber in the state.
In marked contrast to his stand on genetically modified (GM) food crops, the minister has argued that field trials are important for the extension of natural rubber cultivation to non-traditional areas like Tripura, Assam, Meghalaya and North Konkan. Ramesh has argued that the GM approach has become necessary as the challenge of climate change has already resulted in longer dry periods for rubber cultivation.
In a letter to the environment minister on December 20, Kerala agriculture minister,Mullakkara Retnakaran, had pointed out that the field trials which would be conducted by the Rubber Research Institute of India in Kottayam could impact not only the state’s agriculture, “but its agrobiodiversity as well as the highly pristine and vaulable biodiversity”. Retnakaran had also protested the decision arguing that Kerala desires to remain GM free.
The Kerala agriculture minister had argued that since agriculture was a subject on the state list, all future decisions to permit open field trials or releases should be taken after receiving written consent from the states. Responding to the Kerala minister’s concerns, Ramesh has stressed that the GM plant which has been developed by the Rubber Research Institute incorporates a target gene from rubber itself. “Strictly speaking, therefore, this GM plant is not a transgenic in the normal sense of the word,” the minister stressed.
He has clarified that the field trials will be conducted in designated experimental sites inside research farms. “The field trials will not be done in commercially cultivated holdings.”
Further, the Rubber Research Institute of India is not a private research institute, and is therefore not interested “in making GM rubber and making money by selling it...There are no patents for RRII rubber clones which are not IPR protected as far as Indian growers are concerned.”
Finally, the minister has said that the commercial cultivation of GM rubber could be contemplated only on the basis of the proposed field trials, which will take about 14 years.
“A decision on commercial cultivation will be taken only after the field trials are completed fully, at which point of time the views of the state governments concerned will be given due consideration.” The minister has stressed that GM rubber cannot be compared to the bt brinjal case.



Rubber Jumps to Record High

(January 4), the story is rubber. Rubber jumped to a record high of $5.05 per kg, according to the Financial Times.
Rubber is used in tires, condoms and gloves. The price has jumped 25% in two months. Bridgestone, Michelin, Goodyear and Continental have raised tire prices three times in 2010.
Countries around the world are scrambling for rubber. Imports are up 54% in China, 53% in Europe and 49% in South America. Thailand, the world's largest producer, has been besieged with floods, driving production down by one third. Kona Haque, an agricultural analyst with Macquaire in London said: "A combination of aging trees, declining yields, a shortage of labor and rising production costs will prevent producers from quickly making the necessary supply response, regardless of positive prices."
Tire companies are racing to find substitutes for rubber in tire production. Unfortunately, they are a day late and a dollar short. Prices are expected to remain high in the coming months.



Natural rubber surges to record Rs 209.5/kg on global cues

Prices of natural rubber, key raw material for tyre making, today surged to a record Rs 209.50 per kg in the domestic markets on fall in arrivals and firm global cues.
"International prices of rubber are touching new highs and domestic prices are only following them," Indian Rubber Dealers Federation President George Vally said.
He said that prices are further expected to go up as there is still a difference of Rs 16 per kg between domestic and international prices.
"International prices of natural rubber are now ruling at around Rs 225.50 per kg while in the domestic it has only gone up to Rs 210 per kg, so naturally, farmers are also getting better prices," Vally said.
There is a decline in arrivals too as farmers are reluctant to sell their produce on expectations of further rise in prices.
Natural rubber prices in the futures market for February 15 delivery at the Multi Commodity Exchange also touched a high Rs 220 per kg before closing at Rs 218 per kg.
Meanwhile, prices of natural rubber in the markets of Kottayam and Kochi, key trading centres of the commodity, ruled at Rs 209.50 a kg compared to Rs 207.50 a kg yesterday.
The Rubber Dealers Federation has said that the commodity's prices in the domestic market can only decline in the event of cooling of international prices, which are also at record level.
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 rally in international prices of the commodity.
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.



Supply fears send rubber to record high

Rubber rose to a record high above $5 a kg as tyremakers scrambled to secure supplies amid growing concerns of further shortages.
The raw material used in tyres, condoms and gloves has jumped 25 per cent in two months as heavy rain in the key producing region of southeast Asia has disrupted rubber tapping and flooded roads and plantations.
But analysts believe the rubber market will surge in the first half of the year as production in Thailand, which accounts for a third of global output, enters a seasonal lull.
Jom Jacob, senior economist at the Association of Natural Rubber Producing Countries in Kuala Lumpur, Malaysia, said: “An already severe supply situation is likely to be aggravated further during the period from February to May 2011 coincident with annual leaf-shedding of trees”.
That has pushed rubber consumers to make purchases. Rubber imports by China, the world’s largest consumer, jumped 65 per cent in November from a year earlier, while Indian imports are also rising sharply.
Mr Jacob said demand was likely to gain further momentum in January as consumers stocked up ahead of the Thai winter and that market sentiment was “dominated by uncertainty in the supply”.
Paul Lee, executive director of Sri Trang Group, estimated the industry was holding only a week’s stock of natural rubber. “In the short term we are going through a period of supply constraint and it is going to take 3-5 years to resolve itself,” he said.
The leading tyre companies including Bridgestone, Michelin, Goodyear and Continental are struggling to keep up with rising raw materials costs in spite of raising prices as many as three times in 2010.
Bridgestone, the world’s largest tyre company by market share, said recently it hoped to reduce its rubber consumption by 50 per cent in the long term, while Continental, the German car parts supplier, said it was “working aggressively” to substitute other materials for natural rubber in its tyres.
Herbert Mensching, head of European sales at Continental, which recently announced a 7 per cent increase in commercial tyre prices, said: “For a while now, the extent and speed of the rise [in rubber prices] have already caused us to chase after the actual cost development with our price increases.”
Rising tyre prices will feed through into higher costs for companies, particularly in the mining sector, where booming capital expenditure is increasing demand for truck tyres.
The benchmark rubber price, RSS3 or ribbed smoked sheet 3, was quoted at $5.05 per kg in the physical market on Tuesday, according to the Rubber Research Institute of Thailand. Futures in Tokyo also hit a record in yen terms. The price of natural rubber has quadrupled in two years, earlier this year surpassing the 1952 record when fears about the potential spread of the Korean War triggered panic buying.
The most recent move higher has been driven by the worst floods in decades in Thailand which will reduce fourth quarter output in the world’s largest producer by 33.4 per cent year-on-year, according to the ANRPC.
But booming demand has also played a part. Global light vehicle sales are estimated to have exceeded their pre-crisis peaks in 2010, while purchases of tyres for new trucks in the first 11 months of the year were up 54 per cent in China, 53 per cent in Europe, and 49 per cent in South America, according to Pirelli.
Analysts and industry executives expect rubber prices to remain high, as years of underinvestment in plantations prevent rapid growth in supply.
Kona Haque, agricultural commodities analyst at Macquarie in London, said: “A combination of ageing trees, declining yields, a shortage of labour and rising production costs will prevent producers from quickly making the necessary supply response, regardless of positive prices”.



Sheet rubber hits Rs 210/kg on supply shortage

Spot rubber prices recorded another high on Tuesday. Sharp gains on the Tokyo Commodity Exchange (TOCOM) futures and a positive mood on the National Multi Commodity Exchange (NMCE) catalysed domestic sentiments, while sellers stayed away expecting better rates in the days ahead. The market continued to experience an acute shortage of the raw material as growers still preferred to hold a major portion of their stocks. Though the change in weather was favourable for tapping, there has been no improvement in arrivals.
Sheet rubber increased to Rs 210 (208) a kg on fresh buying and short covering. The grade moved up to Rs 209.50 (207.50) a kg both at Kottayam and Kochi, according to the Rubber Board.
Futures firm
The January series closed at Rs 212.68 (211.71), February at Rs 219 (218.73), March at Rs 223.70 (223.59) and April at Rs 230.37 (229.63) a kg for RSS 4 on the NMCE.
RSS 3 (spot) firmed up to Rs 226.39 (224.07) a kg at Bangkok. Its January futures flared up to ¥416.2 (Rs 227.90) from ¥405.1 a kg during the day session and then to ¥418 (Rs 228.85) in the night session on the TOCOM.
Spot rates were (Rs/kg); RSS-4: 210 (208); RSS-5: 201 (200); ungraded: 197 (196); ISNR 20: 207 (205) and latex 60 per cent 142 (140).