Commodity Trends: Rubber recovers fast

SUNDAY, MARCH 20, 2011

Rubber prices rebounded on easing of demand concerns caused by Japan earthquake and closure of automobile plants and market returned back to fundamentals. Natural rubber continues to be supported by higher prices of crude oil and tight supplies in producing countries. Pepper gained this week on tight supplies but higher prices of Indian parity weakened export demand. However, export demnad would pick up if prices ease.
COMMODITY ANALYSIS

Rubber
Rubber prices have recovered from the tsunami impact and gained in the domestic market due to thin supplies. Rubber growers are holding back their produce on hopes of better prices. Tocom rubber futures are tumbled 12 percent last week as largest-ever quake created concerns about the demand for the commodity. Several automobile majors had stopped production in Japan causing concerns about demand for tyres.
Association of Natural Rubber Producing Countries (ANRPC) stated that quake hit Japan accounts for seven per cent of the global demand for natural rubber. The crisis in the automobile sector in Japan cannot have a major impact on rubber prices Meanwhile Tokyo rubber futures rebounded sharply towards weekend on supply concerns and hopes of a possible intervention by producing countries to prop up prices.
Tocom Rubber surged on Friday climbing as much as 7.2 percent to 425.5 yen a kilogram ($5,210 a ton) after Thailand, Indonesia and Malaysia, the biggest growers, said they may reduce shipments, Bloomberg reported.
Spot prices monitored by India’s Rubber Board has risen from 21,600 per 100 last week to Rs 22,200 after hitting a low of Rs 18,700 levels.
Spot rubber prices in Thailand are quoted higher at Rs 22,692 on tight supplies while SMR-20 grade at Kuala Lumpur is quoted at Rs 20,234.
The benchmark April rubber contract on India's National Multi-Commodity Exchange (NMCE) rose 12 percent higher at 23134 while May contract rose from Rs 20789 to Rs 23698. Towards weekend, NMCE futures hit higher circuit levels on fresh buying and short covering.
India's natural rubber production in February rose by 5.8 percent on year to 54,500 tonnes, according to Rubber Board, as farmers increased tapping to cash in on a price rally.

(Source: http://www.commodityonline.com/news/Commodity-Trends-Rubber-recovers-fast-uptrend-in-pepper-37387-2-1.html)




Top rubber producers' meet to prop up prices
SUNDAY, MARCH 20, 2011

BANGKOK: The world's top rubber-producing countries, Thailand, Indonesia and Malaysia, will hold an urgent meeting this week to find ways to support prices that have collapsed this month, an senior industry official said yesterday.
The price of Thai USS3, a raw material for export grade rubber sheet (RSS3), fell to 90 baht a kg yesterday from 95 baht (100 baht = RM10.04) on Monday. That is half the record high of 180 baht hit in mid-February.
Rubber futures on the Tokyo Commodity Exchange (TOCOM), which tend to set global price trends, started falling this month when unrest in the Middle East raised concerns about the global economy and rubber demand.
Friday's earthquake in Japan added to these concerns. "We need to do something this week to stop prices from falling," Yium Tavarolit, acting chief executive of the International Rubber Consortium, said, adding that the meeting to discuss the measures will probably be held in Thailand.
"We will consider whether we should stop exporting for a while or cut production, as we used to do in the past, to help support prices." The consortium, which will coordinate the meeting, brings together rubber industry officials, exporters and government officials from the three countries that together account for 70 per cent of global rubber output.
Any decision by the IRCo would have to be ratified by the International Tripartite Rubber Corporation, which groups senior government officials from IRCo countries. TOCOM's benchmark rubber contract for August delivery hit a low of 335.0 yen (100 yen = RM3.75) a kg yesterday, 12 per cent down from Monday's close of 384.1 yen.
At that point, it had lost nearly 40 per cent from a record high of 535.7 yen hit in mid-February.
The benchmark settled at 353.0 yen a kg. TOCOM rubber futures had slumped on Monday, leading to a temporary halt in trade, as rumours circulated that some buyers had defaulted on shipments of physical rubber.
Thai RSS3 traded at a four-month low of US$4.18 to US$4.20 (US$1 = RM3.04) a kg yesterday, against record-high offers at US$6.40 in mid-February.
However, there were no reports of shipment cancellations.
When the global economy faced recession in late 2008, the top three rubber producers said they would cut shipments in 2009 to prop up export prices, which had fallen to around US$1.50 a kg.
However, the measure was effectively dropped when rubber prices recovered because of strong demand from the tyre industry in China and a gradual recovery in the global economy from the second half of 2009.
Thailand may draw up separate plans to intervene in the domestic market, partly to help the government win farmers' vote in a general election likely by July.
The government would do everything within its means to push the price of USS3 higher, Deputy Prime Minister Suthep Thuagsuban said yesterday, urging farmers not to sell at current levels.
"I suggest farmers keep their rubber for a while as the government is pushing prices up very soon, so please wait to sell at 120 baht a per kg, not at this low level," he told reporters. – Reuters
(Source: http://www.btimes.com.my/Current_News/BTIMES/articles/topruta/Article/)




Rubber industries seek lower import duty on latex
SUNDAY, MARCH 20, 2011

KOCHI, MARCH 18:
In the backdrop of the recent surge and wane in natural rubber prices, the All India Rubber Industries Association (AIRIA) has asked for the immediate correction in the inverted duty structure in rubber latex, on the lines of natural rubber that was effected recently. The import duty on latex stands at a significant 70 per cent, even as that on the finished product is less than 7.5 per cent, AIRIA said.
While growth in natural rubber production has been modest, huge capacity build up is being undertaken by the tyre industry, which could increase the demand for natural rubber in the immediate future. According to the Rubber Board, the cumulative production of natural rubber in the country grew by three per cent to 8,04,450 tonnes during April-February period. Consumption, meanwhile, grew by 1.9 per cent to 8,68,230 tonnes.
The growing demand and prices has prompted AIRIA to write to the Finance Ministry pointing out that the increase in price of latex is threatening the very survival of the industry which comprises mainly of small units. Latex is largely consumed in the country in the production of foam mattresses, medical and surgical articles including gloves, balloons, hot water bottles and some sports goods.
Latex prices
Along with the price of rubber sheet, latex prices have also surged from around Rs 55 a kg in January 2009 to Rs 117 at present , after having peaked to Rs 148. It is surprising that the import duty on latex has been gradually enhanced from 25 per cent in 1999-2000 to 70 per cent recently, while that on finished goods has been reduced from 40 per cent to less than 7.5 per cent during the same period, Mr Vinod Simon, President of AIRIA said.
Mr Simon added, “The facilitated import of finished goods is antithetical to the Government's avowed policy of enhancing domestic value addition.” A large number of the small and medium scale units are not able to pass the price hike to the consumers.
The Government has all along considered natural rubber and latex as co-existing products. Natural latex is the first stage output of the rubber tree and is processed to obtain natural rubber. While considering the reduction in customs duty on natural rubber to 7.5 per cent for a limited quantity till March 2011 and subsequently a cap of Rs 20 per kg, the Government should have considered a reduction in customs duty on rubber latex as well, AIRIA said. While natural rubber is attracting duty at Rs 20 a kg at current prices, latex is attracting customs duty of over Rs 100 a kg.
Meanwhile, the Rubber Board has said that rubber production for February has increased by 5.8 per cent to 54,500 tonnes, while consumption has decreased by 2.5 per cent to 79,000 tonnes.
(Source: http://www.thehindubusinessline.com/industry-and-economy/agri-biz/article1550860.ece?homepage=true)




Steps for regular export of rubber latex sought
SUNDAY, MARCH 20, 2011

KOTTAYAM: Rubber Board chairperson Sheela Thomas has called for the export of rubber latex on a regular basis.
Addressing a meeting of latex producers convened by the Rubber Board here on Thursday, Ms. Thomas urged latex producers to make long-term arrangements for exports. She said the public-sector rubber companies should make special efforts in this direction as they were the major producers of latex.
Price differential
The meeting noted that the prevailing market situation, wherein the international latex price is ruling higher than the domestic price, was favourable for exports.
The participants observed that it would be advantageous for the Rubber Producers' Societies (RPSs), which market their produce as latex, to switch to sheet-making considering the existing price differential.
Association of Latex Producers of India president Satheesh Abraham, representatives of the Plantation Corporation of Kerala (PCK), the State Farming Corporation, the Rehabilitation Plantations, Harrisons Malayalam Ltd., and Periyar Latex Ltd., participated in the meeting.
Sunny Sebastian, Director (Processing & Product Development); Ramesh B. Nair, Joint Director (Statistics & Planning) and Binoi Kurian, Deputy Director (Marketing) of the Rubber Board also attended the meeting.
(Source: http://www.hindu.com/2011/03/19/stories/2011031951321600.htm)