Spot rubber rebounds on short covering

Spot rubber rebounds on short covering


Kottayam, Feb. 2:
Spot rubber bounced back on Tuesday. Prices gained further catalysed by the sharp come back on the National Multi Commodity Exchange. Prices are likely to edge higher this week as bargain hunting driven by lower supplies and strong world markets are seen supporting, dealers said. The wide difference between local and international prices is tempting farmers to hold their produce. Certain tyre manufactures bought actively.

According to market circles, sheet rubber improved to Rs 228 (222.50) a kg on fresh buying and short covering. The grade increased to Rs 226.50 (223.50) a kg both at Kottayam and Kochi, as reported by the Rubber Board.

Futures gain

In futures, the February series flared up to Rs 232.00 (224.86), March to Rs 236.90 (228.88), April to Rs 246.65 (238.56) and May to Rs 253.00 (245.69) a kg for RSS 4 on the NMCE.

RSS 3 firmed up at its February futures to ¥480.5 (Rs 269.18) from ¥478.4 a kg on the Tokyo Commodity Exchange. The grade (spot) finished higher at Rs 265.21 (262.64) a kg at Bangkok.

Spot rates were (Rs/kg): RSS-4: 228 (222.50); RSS-5: 219 (216); ungraded: 214 (210.50); ISNR 20: 222 (220) and latex 60 per cent: 150 (149).



Fresh buying boosts spot rubber prices

KOTTAYAM, FEB. 1:
Spot rubber turned better on Tuesday. The market improved marginally on fresh buying and short covering following a smart recovery on the National Multi Commodity Exchange. According to observers, sellers stayed away expecting further gains in the days ahead and volumes were on a low key.
Speculators were expecting the market to move up further. But since the prices lost ground much earlier to their expectations, most of them were unwilling to take delivery in the February futures and hence the series remained under pressure from their selling.
This has spread to other counters and it created an impact in the physical market also. This is the reason why the prices have been dropped during the past few sessions, said Mr. George Waly, President, Indian Rubber Dealers Federation.
The difference between the international and Indian prices is around Rs 41 a kg as on Monday. The farmers are quite reluctant to dispense with their stocks with the result the movement to the market has almost paralysed, he added.
Sheet rubber firmed up to Rs 222.50 (221.50) a kg, according to dealers. The grade increased to Rs 223.50 (223) a kg as quoted by the Rubber Board.
FUTURES GAIN
RSS 4 bounced back with the February series rising to Rs 225 (217.69), March to Rs 229.15 (222.35), April to Rs 238.60 (231.44) and May to Rs 245.85 (239.25) a kg on the NMCE.
RSS 3 (spot) closed at Rs 262.64 (262.46) a kg at Bangkok. The February futures for the grade slipped further to ¥478.4 (Rs 268.43) from ¥478.7 a kg during the day session but then improved to ¥483.3 (Rs 271.17) in the night session on the Tokyo Commodity Exchange.
Spot rates were (Rs/kg): RSS-4: 222.50 (221.50); RSS-5: 216 (215); ungraded: 210.50 (210); ISNR 20: 220 (219) and latex 60 per cent: 149 (149).



Demand for rubber products on the rise amid promising Chinese prospects

According to statistics, accumulated sales volume of rubber products in China has reached approximately $33.45 billion between January and May of 2010, with a growth of 35.38 percent on a year-on-year basis, whereas the growth rate enjoyed an increase of 31.57 percent compared with the same period of last year. Stimulated by the promising prospect of conveyor belts and rubber tube, rubber seal, small seal, rubber snubber for building and rubber products for automotive, the Chinese rubber industry has overcome the adversity brought on by the global financial crisis and now is growing rapidly.
The 25th International Exhibition on Plastics and Rubber Industries (Chinaplas 2011) will be held between May 17 and May 20, 2011 in the largest exhibition hall in Asia – the China Import and Export Fair Pazhou Complex, Guangzhou, PR China.
As the largest plastics and rubber exhibition in Asia, and one of the most influential exhibitions of its kind in the world, Chinaplas 2011 seeks to grasp the opportunities on the upward development of the rubber industry in China. The convention will feature a new “Rubber Machinery and Equipment Zone” to attract not only rubber machinery manufacturers, rubber product manufacturers and other supporting equipment suppliers around the world to participate in this exhibition, but also buyers from different application sectors to visit, source and network with suppliers in the rubber industry. The set up of the zone is expected to act as a catalyst to boost the development of the industry.
The show scale of Chinaplas 2011 expands and reaches an exhibition area of over 160,000 square meters, covering 20 exhibition halls in Hall A and Hall B of Pazhou Complex. It is expected to attract over 2,200 exhibitors from 35 countries and regions together with 11 country/region pavilions from Austria, Canada, France, Germany, India, Italy, Japan, United Kingdom, the United States, People’s Republic of China and Taiwan to jointly showcase over 1,900 rubber machines and chemical raw materials.



Costly rubber hurts tyre firms

For tyre companies, financial results in the third quarter this financial year pose a paradox. Robust top line growth notwithstanding, tyre firms are taking huge dent on profits owing to three-times spurt in natural rubber prices.
Two tyre companies, JK Tyre and Ceat have declared lower net profits during September-December 2010 despite higher net sales numbers. Other two big tyre firms, MRF and Apollo are likely to report a similar trend in compressed net profits owing to rubber input costs.
“Every rupee hike in natural rubber prices that comprise 50 per cent of tyre output volume, hurts tyre industry’s revenue earnings by Rs 60 crores,” Neeraj Kanwar, nanaging director of Apollo Tyres said.
Last week, tyre companies JK Tyre and Ceat reported lower net profits from third quarter last year by 75 per cent (at Rs 9.14 crore) and 79 per cent (Rs 5 crore) respectively.
Interestingly enough, both tyre companies have posted healthy revenues growth on back of higher demand from a robust automobile industry.
JK Tyre reported net sales of Rs 1,179 crore in the third quarter, up 47 per cent over the same quarter previous year. Ceat too saw its net sales surge 25 per cent at Rs 895 crore for the quarter that closed December 2010.
Apollo’s performance is not likely to be any different though Kanwar was unwilling to divulge any numbers. The company is expected to declare its third quarter results in 10 days’ time.
Modest net profits being posted by tyre companies is being attributed to 167 per cent jump in spot prices of domestic natural rubber year on year at Rs 225 per kg, Rubber Board of India price data for Monday reflected.
“Rubber prices have kept volatile through 2010 owing to strong automobile sector demand from China, added with weather concerns in growing regions of India and South-East Asian nations,” said Rajiv Budhraja, director general of Automotive Tyre Manufacturers Association.
Tyre industry has raised product prices by around 18-20 per cent in January-December 2010. This, however, hasn't been enough to absorb the rise in rubber prices. Prices of other raw materials such as NTC fabric and carbon black have also risen 6 per cent and 25 per cent in the last one-year period.
"We have raised tyre prices by 2-4 per cent on January 27 and may need to do it again. There is no other way (to deal with high rubber prices) than product price increases and efficiency improvement,” said AS Mehta, marketing director at JK Tyres.
Commodity analysts see natural rubber prices bullish in next six months, but high crude prices have dented the outlook in near term. “We do not see rubber prices softening in next six months. Prices would continue the up-trend till China’s demand eases,” said Binoo Joseph, Kochi-based rubber trader and importer.
Other tyre makers Apollo Tyres and MRF will announce their third quarter earnings shortly. Expectations are that these companies are likely to report subdued margins owing to higher rubber prices. Stock analysts expect them to hike tyre prices yet again in coming days.
“There is a limit at which the company can pass on rising raw material costs to vehicle manufacturers. With rubber prices trading high, tyre companies need to still hike prices to maintain profitability,” auto analyst at Prabhudas Liladher, Surjit Arora said.
Rubber futures prices in global benchmark index, Tokyo Commodity Exchange, touched an all time high of 460.40 yen (Rs 243) per kg on January 19, but have eased a bit at around 435 yen per kg level at present.
Higher production notwithstanding, India may have to import nearly 1.6 mt natural rubber this year to meet its domestic demand from tyre and rubber ancillary industries.
Rubber Board estimates India natural rubber production to go up this year to 925,000 tonne from 878,000 tonne in the season that ended on September 30, 2010.



Tapper Shortage The Biggest Problem In Plantations - Rubber Board Chairman, VJ Kurian

Shortage of tappers is the most important problem facing the rubber plantation sector in Kerala, said Sri. V.J. Kurian, Chairman, Rubber Board. It is in order to address this problem that the Board has launched a new scheme to introduce labourers from other states, on a large scale, to plantations in Kerala, he said in a message sent to the state level inauguration of the training programme for non-Keralite tappers, held at Pampady (Kottayam district in Kerala).
Selected workers from Kerala and other states would be given intensive training in the Board's Tapping Schools in Kerala. Workers from other states having valid Electoral Identity Card would be brought to Kerala, after obtaining necessary clearance from the police and medical authorities concerned. After successfully completing the training, their service would be allotted to holdings which are already identified. The whole programme would be implemented with the involvement of Rubber Producers' Societies (RPSs) and the Tapper Banks under their control, said the Chairman.
Under the new scheme, the Board will meet the entire expenses of the trainees for their journey from native place to Kerala and will also provide an allowance of Rs150 a day for each trainee, for food and incidental expenses.
The trainees in batches of 20 will be given 30 days intensive training. Each trainee will be given Rs. 50 every day as stipend and their accommodation will be arranged in the Board's Tapping Schools. Training for the first batch, brought from Orissa State, will commence from 31 January 2011 at Tappers Training School at Kothala, Kottayam. A total of 280 workers will be trained in the Board's seven tapping schools. Board proposes to make available the service of trained tappers to the RPSs by the commencement of the next tapping season.