Rubber climbs to record

Rubber climbs to record
Posted: 08 Feb 2011 11:10 PM PST
RUBBER climbed to a record as the Shanghai market surged after the Lunar New Year break, raising speculation demand for the commodity used in tires from the world’s largest consumer will keep expanding.
The July-delivery contract gained as much as 1.7 per cent to 507.5 yen a kilogram ($6,162 a metric ton) before trading at 503.2 yen on the Tokyo Commodity Exchange at 11:15 a.m. Futures in Shanghai surged 4.3 per cent to an all-time high.
China increased interest rates for the third time in four months yesterday to curb inflation. The People’s Bank of China raised the one-year lending rate by a quarter point to 6.06 per cent and the one-year deposit rate an equivalent amount to 3 per cent.
Premier Wen Jiabao’s government has yet to return rates to pre-crisis levels, seeking to sustain the economy’s rebound to growth of about 10 per cent.

“The moderate increases in Chinese rates are unlikely to derail the nation’s economy from expansion,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said today by phone. “Rubber extended gains amid speculation demand from China will continue to grow.”
The Chinese central bank moved on the last day of the week-long holiday and before a report next week that may show consumer prices rose 5.3 per cent in January, according to the median estimate in a Bloomberg News survey of economists.

Government figures expected next week are also forecast to show China’s export growth accelerated in January and producer prices advanced at a faster pace, according to Bloomberg surveys.
Rubber futures have gained 22 per cent this year, extending last year’s 50 per cent rally, as rising car sales led by China and India boosted demand for tires.
Output from Thailand, Indonesia and Malaysia, which account for about 70 per cent of global rubber supply, were curbed as a La Nina has led to higher-than-average rains in parts of Southeast Asia. The weather event started in June and usually lasts for nine months or more.
Supply is expected to decline in coming months as the low- production period will start in major growing areas in Thailand, Saito at Fujitomi said. Farmers reduce tapping during the so- called wintering period from February to May, when trees shed leaves and latex production drops. Thai rubber output declines as much as 60 per cent during wintering compared with peak levels, according to the Association of Natural Rubber Producing Countries.
The physical price of natural rubber in Thailand, the world’s largest exporter, extended gains to an all-time high of 187.80 baht ($6.12) per kilogram, boosted by strong demand from local and overseas buyers amid concerns over supply shortages, Rubber Research Institute of Thailand said today.
In Shanghai, May-delivery rubber climbed to a record 43,500 yuan ($6,608) a ton before trading at 42,540 yuan at the 11:30 - a.m. local time break.
Natural-rubber consumption in China may rise 9 per cent to 3.6 million tons this year, while rubber use in India may gain 5.2 percent to 991,000 tons, according to the Association of Natural Rubber Producing Countries. – Bloomberg
(Source: http://www.btimes.com.my/Current_News/BTIMES/articles/20110209124136/Article/index_html)






Rubber futures rebound on speculation China may replenish stockpiles
Posted: 08 Feb 2011 10:35 PM PST
Tuesday on speculation that Chinese companies will replenish depleted stockpiles, Bloomberg reported. Inventories monitored by the Shanghai Futures Exchange are down 61% year-on-year. Additional market support is provided by a seasonal phenomenon called the wintering period, during which time farmers reduce rubber tapping.

Thai rubber output declines as much as 60% during this period compared to peak levels. Rubber futures are already up 20% so far this year after increasing 50% in 2010, driven by rising car sales in China and India. At the same time, higher-than-average rainfall in Thailand, Indonesia and Malaysia has curbed production. The Thai cash price for rubber hit an all-time high of US$6.06 per kilogram on Tuesday on concern that the wintering period may result in shortages.

(Source: http://www.chinaeconomicreview.com/dailybriefing/2011_02_09/Rubber_futures_rebound_on_speculation_China_may_replenish_stockpiles.html)






Tokyo futures rise further, but weaker oil weighs
Posted: 08 Feb 2011 10:21 PM PST
BANGKOK, Feb 8 - Tokyo rubber futures rose further on Tuesday on the back of concerns on falling supply, but weaker oil prices still weighed on prices, dealers said.

* The benchmark rubber contract on the Tokyo Commodity Exchange <0#JRU:> for July delivery rose 8.1 yen, or 1.6 percent, to settle at 498.9 yen per kg.

* Oil prices edged down on Tuesday as transit through the Suez Canal remained unaffected by the political turmoil in Egypt, while expectations of a build-up in U.S. crude inventories also weighed.

* "Players liquidated contracts again after seeing oil prices retreat, preventing rubber futures from breaking another new record," one dealer said.

* The Shanghai rubber futures market is closed and will reopen on Wednesday after a week-long holiday.

* TOCOM rubber futures prices were expected to rise further on Wednesday, as fears on falling supply was likely to provide supports, dealers said. (Reporting by Apornrath Phoonphongphiphat; Editing by Jason Szep)

(Source: http://asia.news.yahoo.com/rtrs/20110203/tap-markets-asia-rubber-c3bb44c.html)






Shanghai Rubber Hits Record High Above 41,850 Yuan
Posted: 08 Feb 2011 06:46 PM PST
Benchmark Shanghai rubber futures rose to a record high on Wednesday (February 9) on supply concerns and a surge in the TOCOM futures price, which also hit a record high earlier in the day.

The most active Shanghai rubber futures contract for May delivery rose as high as 43,500 yuan per tonne, climbing above the previous high of 41,850 yuan hit on Jan. 31.

The strong rises come after China moved for the second time in six weeks to rein in its surging inflation with an interest rate rise.

(Reuters, February 9, 2011)






Kumho Schedules Price Increases For March 1
Posted: 08 Feb 2011 06:45 PM PST
Kumho Tire U.S.A. Inc. will raise prices on all passenger, light truck and medium truck tires effective March 1. Kumho says the details of this increase will be provided to its customers in the near future.
"The unprecedented increase in raw material costs over the past few months have made it absolutely essential for Kumho to implement this increase," says the company.
Kumho last raised its consumer and truck tire prices -- up to 6.5% -- on Nov. 1, 2010.
Kumho is the latest tire manufacturer to announce an upcoming price increase.
Consumer
Goodyear Tire & Rubber Co. will raise consumer tire prices on March 1. The increase, up to 6%, will apply to all brands in the United States and Canada.
Falken Tire Corp. also will raise prices on March 1. The price hikes on Falken passenger and light truck tires will range from 5% to 8% depending on the size, with in-line adjustments as needed.
Bridgestone Americas Tire Operations LLC will raise replacement and original equipment consumer tire prices one month later, on April 1, The increases on Bridgestone, Firestone and associate brand passenger and light truck tires in the U.S. and Canada will vary up to 8%.
Cooper Tire & Rubber Co. (2.5%) and Michelin North America Inc. ("the increases will vary by product line") raised consumer tire prices on Feb. 1. Nexen Tire America Inc. (up to 8%) did the same on Jan. 1.
Commercial
The Bridgestone Off Road Tire, U.S. & Canada Commercial Tire Sales division will increase prices on its mining, construction and industrial tires by 12%, "with some in-line adjustments." The increases are scheduled to begin March 1.
The Bridgestone Agricultural Tire, U.S. & Canada Commercial Tire Sales division announced a 4% price increase effective April 1 on the following tires: Firestone agricultural, construction and forestry tires; Bridgestone garden tires; and Regency tires sold in the United States and Canadian replacement markets.
Michelin will increase prices on Michelin brand replacement agricultural tires sold in the U.S. and Canada on March 1. The hikes will be up to 8%.
The company already increased prices on its Michelin earthmover and industrial replacement tires sold in North America up to 7% on Feb. 1. It increased prices on Oliver and MegaMile retread rubber products sold in the U.S. up to 7% on Jan. 3.
CGS Tyres Group (7.5% to 10% on farm and industrial tires), Titan Tire Corp. (up to 8% on farm and OTR tires), Yokohama Tire Corp. (up to 5% on bias and radial OTR tires) and Continental Tire the Americas LLC (up to 8% on truck tires) raised their commercial tire prices on Jan. 1.
(Modern Tire Dealer, February 5, 2011)






NMCE Rubber drops on short selling
Posted: 08 Feb 2011 03:04 PM PST
NMCE rubber futures traded down on strong selling interest on Monday. Futures started the day on lower note on extended selling pressure. TOCOM rubber also traded down and ended lower at ¥499.30 per Kg. Indian spot market also fell by Rs. 100 per quintal. Thus, on cues from international and domestic market rubber futures ended the day on lower note.
The rubber futures are projected to trade range bound on mixed sentiments prevailing in market on Tuesday. TOCOM rubber July futures are trading positive at ¥499.20 per Kg. However, down spot market activity might pressurize the prices initially. Thus, on cues from international and domestic market futures are likely to trade on a mixed note today.
Factors to Watch For
Shanghai market will resume trade tomorrow after the weeklong holiday due to Lunar New Year. Natural-rubber inventories monitored by the Shanghai Futures Exchange is reported around at 58,673 tons, which is down by 61 % from last year’s highest inventories of 151,832 tons
According to the Rubber Research Institute of Thailand, Farmers reduce tapping during the wintering period from February to May, when rubber trees shed leaves and latex production declines. Some plantation areas in northeast Thailand have already entered the low-output season
According to the Rubber Research Institute of Thailand, the Thai physical price remained at a record 184.05 baht ($5.97) per kilogram yesterday
According to the Association of Natural Rubber Producing Countries, Natural-rubber consumption in China may rise 9% to 3.6 million tons this year and India’s consumption may gain 5.2% to 991,000 tons
According to China Association of Automobile Manufacturers, Car-sales growth in China will be around 10 to 15 percent this year Total auto sales, which include cars, trucks and buses, jumped 32 percent last year to 18.06 million
DERIVATIVE ANALYSIS
Indian Futures (NMCE)
The NMCE February contract, prices and open interest are falling while volumes are rising. Market is running out of traders willing to open or hold an open sell/short. Traders are liquidating both loosing buy positions & closing winning short positions. Prices are likely to remain volatile to down.
Japan Futures (TOCOM)
The TOCOM active June contract, prices and volumes have fell while open interest has increased. It is a good indication that a sharp rally against downtrend will develop creating a sell point for downtrend.
Courtesy: Karvy Commtrade Ltd.

(Source: http://www.commodityonline.com/futures-trading/technical/NMCE-Rubber-drops-on-short-selling-21766.html)






Rubber factory fined for air pollution
Posted: 08 Feb 2011 03:03 PM PST
The Department of Environment (DoE) in an enforcement drive yesterday fined the authorities of a rubber factory Tk 7 lakh for polluting the environment in its surrounding areas in Tejgaon industrial area.

This is for the first time DoE punished the authorities of any factory for odour pollution under the environment act, says a DoE media release.

According to the department, Northern Rubber Manufacturing Company Ltd has been polluting the surrounding areas where 120 families reside.

The department ordered to shut the factory's Reclaim Rubber Unit which emantes the malodour.

Led by Muhammed Munir Chowdhury, director (enforcement) of DoE, a team conducted the drive in the factory following complaints from residents of North Kunipara and Shantiniketan areas.

During the drive, the team found that the factory is emanating extreme malodour while recycling old rubber materials. Besides, the factory employees, workers and nearby residents are facing severe environment pollution as small particles of rubber are being discharged into the air.

The team also found that the factory authorities did not take any effective measure to control the pollution.

The factory is of the red-class category according to the environment act, as it manufactures rubber sheets, adhesive, and foam.

The DoE directed the factory authorities to install bio-filter, and dust collector to stop the pollution.

The factory authorities pledged to implement all the directives, the release added.

(Source: http://www.thedailystar.net/newDesign/news-details.php?nid=173495)






The Price Crisis Part IV: China Stretches Rubber Demand
Posted: 08 Feb 2011 02:48 PM PST
China has announced that it would put a cap on new vehicle registration in Beijing. It is the price the country is paying for its rapid economic growth. The high demand for personal vehicles has resulted in urban gridlock. It also has led to the inevitable rise in demand for more tires. The result has been soaring rubber prices that have hit record levels due to tight supplies.

China has become the world’s largest producer of automobiles and tyres. It is ranked as the world’s top rubber consumer. However, the full potential of its vehicle market is yet to develop.
While in the U.S., vehicles per 1,000 people is about 760, in China that ratio is 130. As more Chinese prosper, vehicle demand will also go up. So will the demand for rubber.
It is reckoned that when the per capita GDP touches about US$1,000, a country can expect to see its households going for car purchases. In 2001 when China hit this income figure, the demand for vehicles saw a spurt.
Soaring income is still driving up auto sales. China vehicle sales are set to outstrip the U.S. for the third consecutive year in 2011, when they are likely to hit 20 million. The sales in the first 11 months of 2010 have hit 16.4 million units and were expected to reach 18 million by 2010’s end, according to the China Association of Automobile Manufacturers.
It was in 2009 that China overtook the U.S. as the world’s biggest car market with sales growing at an incredible pace of 45% to touch 13.6 million units. This kind of explosive growth has pushed tire and rubber demand to stratospheric levels.
Even the new vehicle registration norms, which could be extended to various other cities to reduce the traffic gridlock, might have only a mild initial impact because the cap on vehicles will come at a time when more Chinese are going up the income ladder on the back of robust economic growth.
The tire demand in the aftermarket is also on healthy ground. Vehicle owners have replaced about 100 million tires in 2009, which represented about 11% of global sales. The demand for replacement tires is about twice that for OEM tires, accounting for over 2/3 shares in the domestic tire market.
China, which would need more rubber to meet the rising demand from tire and auto makers, is already facing depleted stocks. It has prompted the country to rush to the international market, pushing up the prices further.
According to Singapore-based International Rubber Study Group, global demand for natural and synthetic rubber will expand about 40% to 33.9m tons by 2020 driven by usage in China and India.
It said the world consumption may total 24.3 million tons in 2010, 15.3% higher than in 2009, and it would gain a further 6.3% in 2011.
Rain Havoc
As rains lashed Thailand, the world’s top rubber producer, the market shook further scrambling for more stocks.
Besides demand from China, the rise in crude oil prices, which hit US$91 a barrel late December 2010 on signs of recovery in the U.S. economy, also has shown its impact on rubber prices.
Despite the tough tariff on Chinese tires by the U.S., manufacturers are finding new markets, which have sustained their accelerated production. Exports have in fact jumped 30% in the first six months from a year earlier to 86.68 million units as demand from developing countries outweighed lost sales in the U.S., analysts have said.
The demand for tires, which is on an upswing, will put more pressure on rubber. China has seen lower production due to severe drought in Yunnan region at the beginning of 2010 and recent heavy rains in Hainan, the top two rubber production centers in the country.
Although tire exports have been booming, China is also focusing on developing the domestic market. It has achieved economies of scale because of the large volume production.
China has become the global tire manufacturing center, and particularly since 2004, both production and export volumes have catapulted the country to the top slot in the world.
With an expected annual growth rate of over 20% in the coming years, Chinese vehicle market would continue to drive the demand for rubber and tires. Even multinational companies, which are seeing mature markets shrink, are setting up or expanding tire and rubber production facilities in China. Already their output exceeded 50% share in the domestic market, particularly in the high-end high-performance tire segment.
Analysts point out that vehicle caps as in Beijing or withdrawal of incentives may not dampen the demand scenario.
China Automobile Industry Association has indicated that vehicle buying incentives will likely expire at the end of December as originally planned. The government had slashed a 10% tax on car sales to 5% in 2009 and then raised the rate to 7.5% in 2010, which helped sales soar 34% to 16.4 million through November.
In other words, nobody thinks rubber prices would come down now that crude oil prices are also inching up. What is worse, the rains in Thailand, Indonesia and Malaysia, the top three rubber producers, have hampered tapping resulting in lower output.
With rising vehicle demands in China, the rubber supply shortage is set to worsen as the low-production season starts in major growing countries early next year. There is unlikely to be any respite to the scorching rubber price increases.

(Source: http://www.tirereview.com/Article/84069/the_price_crisis_part_iv_china_stretches_rubber_demand.aspx)






Spot rubber remains steady
Posted: 08 Feb 2011 02:47 PM PST
KOTTAYAM, FEB. 8:

Spot rubber finished almost unchanged on Tuesday. The market lost its direction as the domestic futures declined recording moderate losses in all its contracts on the NMCE. Gains in global rubber rates failed to enhance the sentiments but the prices managed to sustain at current levels lacking quantity sellers on any grade.

Sheet rubber closed flat at Rs 237 a kg both at Kottayam and Kochi according to traders and Rubber Board. Meanwhile RSS 5 lost marginally on comparatively low demand. The overall volumes were dull.

FUTURES DECLINE

The February series declined to Rs 232.50 (236.77), March to Rs 237 (241.91), April to Rs 246.00 (250.57) and May to Rs 249 (254) a kg for RSS 4 on the National Multi Commodity Exchange (NMCE).

The volumes totalled 15070 lots and open interest 13358 lots. The turnover was Rs 364.94 crores.

RSS 3 (spot) closed firm at Rs 275.61 (272.82) a kg at Bangkok. The February futures for RSS 3 improved to ¥503 (Rs 277.49) from ¥498.7 during the day session and then to ¥506 (Rs 279.15) a kg in the night session on the Tokyo Commodity Exchange (TOCOM).

Spot rates were (Rs/kg): RSS-4: 237 (237); RSS-5: 226 (227); ungraded: 221 (221); ISNR 20: 231 (231) and latex 60 per cent: 152 (152).

(Source: http://www.thehindubusinessline.com/industry-and-economy/agri-biz/article1168387.ece)