Quake in Japan has limited impact on rubber demand - ANRPC

Quake in Japan has limited impact on rubber demand - ANRPC
TUESDAY, MARCH 15, 2011

(Reuters) - An earthquake which struck Japan and spurred a nuclear crisis will have limited impact on global demand because there is no damage to plants owned by major firms such as Bridgestone Corp and Michelin , the Association of Natural Rubber Producing Countries said on Tuesday
"The closure of a handful of auto-tyre plants in the country's northeast region for a few days cannot impact on the commodity's global demand in a significant way," ANRPC's secretary-general, Djoko S. Damardjati, said in a statement.
"If at all there is any marginal impact, it will be for a short-term only."
Japan faced potential catastrophe on Tuesday after a quake-crippled nuclear power plant exploded and sent low levels of radiation floating towards Tokyo, prompting some people to flee the capital and others to stock up on essential supplies.
For a FACTBOX on the quake impact of Japan manufacturers
Japan accounts for seven per cent of the global demand for natural rubber.
Bridgestone, Japan's largest tyre maker, said its five plants in the northeast of Japan were unaffected by Friday's deadly quake, although production had to be stopped due to supply problems and safety considerations, according to the ANRPC.
Toyo Tire & Rubber Co. confirmed the buildings or facilities in any of its plants had not been damaged.
No damage has been reported for Sumitomo Rubber Industries Ltd., Yokohama Rubber Co. Ltd. and Michelin which are the three other auto-tyre manufacturing companies running plants in Japan, said the ANRPC.
"A few plants which have to be shut down, due to power supply stoppage and safety concerns, will resume production on restoration of electricity supply."
The quake, however, spurred heavy selling on Tokyo Commodity Exchange, where the benchmark rubber contract, currently August 2011 , tumbled 12 percent to a four-month low.
Tokyo rubber futures have dropped more than 30 percent since striking a record around 535 yen a kg in February on worries that unrest in the Middle East could hurt the global economy, and recently after the deadly quake in Japan spurred a nuclear crisis there.



Rubber in Tokyo Falls to Four-Month Low as Japan Quake May Derail Demand
TUESDAY, MARCH 15, 2011

Rubber futures declined for a third day, tumbling to the lowest level in more than four months, after Japan’s strongest earthquake damaged car plants and caused electricity shortages, threatening the economic recovery.
August-delivery futures plunged as much as 13 percent to 335 yen a kilogram ($4,097 a metric ton), the lowest intraday price on the Tokyo Commodity Exchange since Nov. 4, before settling at 353 yen.
“Selling continues as investors want to reduce risk amid concern that demand may slow after the earthquake,” Gu Jiong, an analyst at commodity broker Yutaka Shoji Co., said from Tokyo. “Demand from China and the U.S. is still not clear and investors are wary of taking long positions,” he said.
Rubber has plunged 33 percent from a record 528.4 yen reached Feb. 17 as worsening Middle East tensions and slowing car sales in China, the largest buyer, raised concerns demand may decline. Losses intensified after the earthquake in Japan caused power disruptions, forcing carmakers to halt production.
Tocom expanded the trading limit for rubber contracts for a second time yesterday to 50 yen from the previous settlement price, the exchange said yesterday on its website.
Asian stocks slumped, dragging the benchmark index down by more than 10 percent from its January peak, on concern a nuclear accident and power shortage caused by the earthquake will cripple the Japanese economy.
Japan’s Prime Minister said the danger of further radiation leaks from a crippled nuclear power station is rising after three explosions and a fire at the site 135 miles north of Tokyo.
Output Loss
“Demand for rubber could be hit in the near term due to the physical lack of access and potential disruption to tire and car-manufacturing plants in Japan, especially near the earthquake,” Ivy Ng, an analyst at CIMB Investment Bank, said in a report today. “Also, potential buyers could stay on the sidelines, hoping to snap up these commodities at lower prices due to short-term uncertainty in the market.”
Toyota Motor Corp. (7203), the world’s largest carmaker, may lose output of at least 40,000 vehicles, Shiori Hashimoto, a spokeswoman for the company, said by phone yesterday. The manufacturer’s profit will be cut by 6 billion yen ($72 million) for each day of lost operations in Japan, while Nissan Motor Co. and Honda Motor Co. may each lose 2 billion yen a day, Goldman Sachs Group Inc. estimated.
Thai Shipments
Some investors are concerned Thailand, the top rubber supplier, may halt exports, said Navarat Kaewpratarn, a senior marketing official at Future Agri Trade Co.
Thailand’s Deputy Prime Minister Suthep Thaugsuban asked exporters to suspend shipments to stem a plunge in prices and will ask banks to offer low-interest loans to help shippers stockpile the commodity.
The Thai government will negotiate with commercial banks to extend low-interest loans to exporters for them to buy unsmoked sheets from farmers at a minimum price of 120 baht a kilogram, said Suthep, who chairs the rubber policy committee. The government will also encourage farmers not to sell sheet below the minimum level, he said.
The auctioned price of ribbed smoked sheet at a rubber trading center in the southern province in Songkhla gained 1 percent to 106 baht a kilogram, boosted by the government’s attempt to tackle price declines, the Rubber Research Institute of Thailand said on its website. The price tumbled 19 percent yesterday.
The free-on-board price, or cost without freight and insurance, for Thailand’s benchmark ribbed smoked sheet plunged today for a ninth day, tumbling 10 percent to 135.25 baht ($4.94) a kilogram on demand concerns, the institute said. The price reached a record 198.30 baht on Feb. 21.
May-delivery rubber in Shanghai declined as much as 2.2 percent to 32,750 yuan ($4,986) a metric ton, the lowest intraday level since Dec. 10, before closing at 33,155 yuan.



Thailand exporters asked not to export rubber
TUESDAY, MARCH 15, 2011

TOKYO (Commodity Online): Rubber, which exhibited a robust demand lately is now continuing with the downward spiral as the prices tumbled to the lowest level in more than four months.
TOCOM August contract, the most active contract, has plummeted as much as 13% to 335 yen for a kilogram ($4,097 a metric ton) before being traded at 360.5 yen at 12:10 p.m , reported Bloomberg.com.
Monday, the contract was down 4.5% or 17.9 yen and reached 383.5 yen a kilogram ($4,665 a metric ton) at one point.
There are also concerns that Thailand will stop rubber exports amid the price attrition with the Deputy PM asking exporters to suspend shipments and instructing banks to provide them with credit so that traders can stock pile rubber.
The government is also encouraging farmers not to sell produce below the minimum levels.
Rubber has tumbled 32% since touching 528.4 yen on February 17.
Middle East crisis and China taking foot away from the growth pedal have been the pivotal factors until Japan crisis forced auto majors to shut shop there.
Radiation fears are driving the markets mad with the ever-golden-precious-metal gold shedding weight, though in a minimal manner.
With the Japanese car makers shutting shop, April rubber contract in Tokyo Commodity Exchange (TOCOM) was suspended as it hit the circuit breakers when it tumbled 30 yen to reach 378.4 yen on Monday.
Honda and Nissan, among of the largest manufacturers of automobiles have halted operations. Toyota will keep shut its plants on 15 and 16 while Isuzu will be closed until March 18. Hino Motors would be closed until March 18 too.
Nissan has reported damage to 2300 new vehicles and minor damages to four of its factories.




NMCE Rubber slumps on selling pressure
TUESDAY, MARCH 15, 2011

NMCE rubber futures extended the losses on strong selling interest on Monday. On opening itself prices started trading down on continued selling pressure. Domestic spot market also extended bearish trend on sluggish demand.
Rubber futures at TOCOM also witnessed a sharp fall and ended the day at ¥343.00 per Kg. News of tsunami in Japan weighed on sentiments and prices in all rubber market across the world fell drastically on huge selling pressure and futures at NMCE ended in 4% lower circuit.
The rubbers futures are projected to continue the bearish trend on global cues on Tuesday. TOCOM August rubber is also trading down at ¥384.10 per Kg on active selling. Domestic spot market at Kochi and Kottayam also witnessing the same down trend. Thus, on cues from negative international market prices at NMCE plat form may trade on lower note.
Factors to Watch For
Rubber spot market of Kochi fell below `20,000 per quintal yesterday taking cues from global rubber market sentiments
Prices are likely to continue the bearish trend as demand from Japan a major rubber importer will decline because due to power supply disruption in Japan has caused production halt by auto manufacturing companies
According to rubber board of India, Indian February Natural Rubber Output is 54,500 Tons Vs 51,500 Tons, consumption is 79,000 Tons Vs 76,350 Tons and imports are 6,831 Tons Vs 12,278 Tons
As per data released by rubber board, the year end deficit in natural rubber in India is estimated around 1.2 lakh tons and it is expected to be increase to 2 lakh tons during 2011-12
According to the Rubber Research Institute of Thailand, physical price of Thai rubber shed 1.5 percent to 189 baht ($6.18) a kilogram Monday
According to the Association of Natural Rubber Producing Countries, Consumption in China, India and Malaysia, representing 48% of global usage, will increase this year
According to China Passenger Car Association, Sales of passenger cars and minivans declined 0.4 percent from a year earlier to 880,027 last month
DERIVATIVE ANALYSIS
Indian Futures (NMCE)
The NMCE March contract, prices, prices and volumes are falling while open interest is rising. It is a good indication that a sharp rally against downtrend will develop creating a sell point for downtrend.
Japan Futures (TOCOM)
The TOCOM active August contract, prices are falling while volumes and open interest are rising. If prices are in a downtrend and open interest is on the rise, chartists know that new money is coming into the market, showing aggressive new short selling. This scenario will prove out a continuation of a downtrend and a bearish condition.
Shanghai Futures (SHFE)
The SHFE active July contract, prices are rising while volumes and open interest are falling. Market is running out of traders willing to open or hold an open long/buy. Traders are liquidating both loosing short positions & closing winning long positions. A higher probability the market is set to retrace in price lower at some point.




Domestic nat rubber prices fall on Japan earthquake effect
TUESDAY, MARCH 15, 2011

New Delhi, Mar 14 (PTI) Natural rubber (prices) today fell in the domestic spot markets by Rs 16 to Rs 185 per kg, the lowest for the current year due to the earthquake in Japan that has hit international rubber markets.
The prices of NR in the domestic market were ruling at Rs 201 per kg on March 12, according to the rubber board data.
"The earthquake in Japan has hit the international markets. Tokyo Commodity Exchange (TOCOM), which is the major international futures market for rubber was shut on March 12," Cochin Rubber Merchants Association Advisor N Radhakrishnan told PTI.
Radhakrishnan said shutting down of TOCOM hit the international markets both futures and spot inIndonesia, Malaysia and other places that resulted in a steep fall in the prices.
The rate of NR at the international spot market at Bangkok fell by almost Rs 18 to Rs 223.74 per kg today as against Rs 241.26 on March 11, rubber board data said.
"As the consumption of NR in Japan for automobiles and other items came to a complete halt, the prices further weakened. I expect the prices to go down further," he added.
Radhakrishnan opined that the prices can fall further as the total extent of the damage in Japan is not known and it could possibly take a week or more for that data to come out.
"A fall in the rubber consumption could be expected for 2011-12 year," he added.
According to experts, the rubber prices were going up on speculation and with TOCOM closing down after the earthquake, there was panic in the international markets. This panic can continue for a few more days.
The coming 2-3 days are crucial as the prices in the domestic markets can fall to Rs 160-175 per kg taking a cue from the global markets which are reeling under the tsunami effect, experts said.
The prices of NR in the domestic markets on March 12 fell by Rs 11 to Rs 201 per kg as against Rs 212 per kg on March 11.
Since March 11 the prices of NR have witnessed a fall of Rs.27.




Expect steel prices to soften, rubber to rise: Rohtash Mal, Escorts Ltd
TUESDAY, MARCH 15, 2011

Rohtash Mal , Executive Director and CEO, Escorts Ltd .in an interview with ET Now talks about input costs and capacity utilistation.
Look at the kind of data that is coming in the IIP, particularly for the cap goods space for the last 4 months has been dismal. I do not believe the volumes have been too great as well as far as tractors go. Is the situation looking really bad or will it shape up better ahead of the monsoon months?
Firstly yes, the statistics that have come out are dismal, but then statistics often hide the far more than they reveal and in this space that we are talking about i.e. tractors and farming, on the contrary, we are seeing growth rates which are in the region of 25%. The tractor industry is growing between 22% to 25% for all of the last 17-18 months and even if you take the last 4-5 months, the clip is bang on and speaking for Escorts to be growing at the same pace. So while the whole index of industrial production has taken a dip, if you go sectorally inside and if you analyse it in detail, there are signs of positivism and sunshine there too such as tractors.
Just to talk a little bit about the rise in input cost this time around, are you beginning to feel the significant pricing pressure or do you believe that there is decent demand in order to absorb the rise we have seen of late?
This has been a trend in the last 6 to 7 months, cost increases have happened over the last 6 to 7 months. These have been in essence passed onto the market, in essence made up by internal efficiencies and we have just announced the price increase from the 1st of March by about 4% and these have including internal efficiencies taken care of the cost increase.
As far as the cost push is concerned, I still see an incline, although there are some signs of steel prices softening just a bit. This equation may change with the unfortunate and dramatic developments in Japan but for the last few months, cost pressures that have been seen have been managed by the industry both on account of internal efficiencies and price increases to a buoyant market.
Just expand on that point a bit, how would the situation change because of what has happened in Japan.
Look, you are going to have a lot of turbulence in many industries, steel for example. There is likely to be some turbulence there. We are not quite sure what has been affected yet and what not. After all the whole thing is close onto 2 to 3 days old.
We are still getting reports on how demand supply patterns are going to change and it will show up overtime and in any case the tractor industry in India is not dependent on imported steel but it does change the steel demand supply balance.
So this will play out. On its own if it had not been for Japan, I would have seen prices slightly softening in terms of steel and going up for rubber and other materials. So I would expect inflation pressures to continue in the next 3 to 4 to 6 months until some kind of a decline is seen around quarter 3 or so. So to go back to your original question, yes there have been cost increases. We have managed to pull through that, with the price increases as well as enhancing internal efficiencies which at Escorts is a constant movement.
The last time that we did interact, you indicated that you were operating at close to 70% capacity utilisation, what are the levels that you are currently operating at?
The big smile on my face says that last month we operated close onto 80% and in the month which has just started, it should be around the same number. So the running average for the last few months has been inclining beyond 70%. We are now looking at 75-76-77% going forward.




Tyre shares surge as rubber prices ease; JK Tyres up 8.5%
• TUESDAY, MARCH 15, 2011

Shares of tyre manufacturers were up sharply on Tuesday, defying the overall downtrend in the market. With rubber pricesdeclining, analysts expect tyre makers’ earnings to improve.
At 1300 IST, JK Tyre & Industries share was up 8.7% to Rs 96.45,Ceat was up 5.1% to Rs 110, TVS Srichakra was up 4.5% to at Rs 263.80, MRF was up 2.9% to Rs 6692.55 andApollo Tyres was up 2.1% to Rs 69.25.
Price of benchmark RSS4 grade of natural rubber, which had surged to Rs 240 a kilo last month, is in a downward spiral following the devastating earthquake in Japan on Friday.
But this could well turn out to be a double-edged sword, some experts caution.
Several major automobile companies like Toyota, Honda and Nissan have temporarily shut production in Japan, which is expected to hurt demand for tyres.
“Following the earthquake, there are concerns over automobile production in Japan. A drop inproduction there, coupled with sluggish sales in China, is expected to hurt demand for tyres and that is dragging rubber prices down,” Chaitanya Adesara, analyst at Sharekhan said.
In the Kochi market, price for RSS4 grade rubber fell sharply to Rs 185 a kilo on Monday from Rs 201 on Friday.
Adesara said rubber prices could fall to Rs 170 per kilo levels.
Tyre manufacturers’ profits have been hit by surging raw material costs over the last few quarters.
MRF reported a 14.4% drop in net profit for the October-December quarter to Rs 102.18 crore.
Analysts say the tyre companies will be carrying high-cost inventory in the fourth quarter, which would continue to put pressure on earnings.
However, the recent slide in rubber prices will boost earnings growth in the April-June quarter, they say.




Thai government to buy rubber to support prices
TUESDAY, MARCH 15, 2011

BANGKOK (Commodity Online): Plunging rubber prices caused by the earthquake and tsunami in Japan may force Thailand government to pump in a massive 8 billion baht ($263 million) this week to buy natural rubber from the domestic market.
Thailand is the largest rubber producer in the world. Rubber prices have crashed in the domestic market after the Japanese earthquake and tsunami have unleashed fears that demand for natural rubber might slump as the catastrophe has hit major car companies in Japan.
On Tuesday, the Thailand government is expected to announce steps to arrest rubber prices, officials said.
Deputy Agriculture Minister Supachai Phosu told Reuters that the government will intervene to buy and stock rubber from the domestic market to ensure that rubber prices do not fall further.
"The cabinet has approved money for intervention in the past few years and we could use that money to buy rubber again in a bid to support farmers," he said. The Thai government has allocated 8 billion baht ($263 million) fund in the budget for buying rubber.
The spot price for unsmoked rubber sheet (USS3) has almost plunged by half from the record high of 180 baht per kg in mid-February. It plunged to 95 baht per kg on Monday.
" We need to do something to support rubber prices; they should not fall below 100 baht ($3.29) per kg," Deputy Prime Minister Suthep Thaugsuban said.
Rubber traders and farmers hit by the crash in the natural rubber prices have appealed to the government to immediately take measures to ensure that prices do not fall below 100 baht.
According to the Association of Natural Rubber Producing Countries, Thailand's government intends to intervene in its domestic natural rubber market and support prices following their recent fall.
The earthquake and tsunami in Japan had a devastating effect on rubber prices across the world. In India, where rubber prices ruled at Rs 240 per kg, futures trading at the National Multi Commodity Exchange (NMCE) plunged to Rs 190 in the last few days.
Traders expect the rubber price fall as short-term and they said long-term rubber prices are in a bullish phase.



Indian exports take a hit, gains seen in long term
TUESDAY, MARCH 15, 2011

KOLKATA/MUMBAI/KOCHI/AHMEDABAD: The earthquake in Japan has knocked the bottom out of India's iron ore, animal protein and seafood exports as ports shut down in the island country, and increased volatility in Indian commodity markets as jittery investors try to gauge damage. But the disruption may be temporary. Once the world's third-largest economy starts rebuilding its homes, factories and cities, traders are expecting demand for everything from metals and coal to timber, rubber, food and animal feed to zoom.
That would create a mega market for Indian exporters seeking an alternative to faltering Chinese demand. The ensuing spiral in global commodity prices would boost profits for Indian raw material producers, although that may come at the cost of local user industries such as automobiles, construction, power and infrastructure.
Iron ore prices have been amongst the most volatile. Prices dropped to a three-month low after the quake on estimates that up to 18 million tonnes of Japanese steel-making capacity could have been hit by the quake. This could affect demand for 25 million tonnes iron ore and 10 million tonnes coking coal in a year.
Iron ore continued to lose ground on Monday, with a shutdown in some Japanese steel plants expected to further reduce demand. "The offtake by Japanese steel mills will be under pressure," said Basant Poddar , managing director of Banglaore-based mining company Mineral Enterprises . Even so, iron ore exporters are confident of business booming. RK Sharma, secretary general of industry body Federation of Indian Mineral Industries , said outlook is bullish in the long run as reconstruction will require large amounts of copper, aluminium and steel.
"This augurs well for Indian companies," he said. Agri-commodities too are feeling the pressure of the Friday's catastrophe. Spice processors are bracing for slower exports to Japan. "Spice exports in the short term could be down by up to Rs 70 crore. But Japan's economy is resilient and could bounce back in a few months,'' said Geemon Korah , chairman of Kochi-based All India Spices Exporters Forum .
An official at Ambika Healthcare , a Mumbai-based company which exports Indian food and herbal products exclusively to Japan, said: "We ship about 10 containers per month. After the earthquake, all the consignments have been postponed. We expect the demand to go up sharply once the country returns to normalcy." Seafood exporters are equally on tenterhooks as Japan buys a fifth of their produce. "It is too early to comment on the impact of the earthquake. We are assessing the situation", said Anwar Hashim , president of industry body Seafood Exporters Association of India .
The price of oilmeals or proteins fed to animals, is also likely to remain depressed for the next two weeks, say traders. Up to 20% of India's total soyameal export of 4.5 million tonne goes to Japan. "Prices have come down to $395 per tonne from $405 per tonne after the tsunami," said Rajesh Agarwal, coordinator, Soyabean Processors Association of India . "Prices were already under pressure in line with global commodity markets and the Japan crisis has further dented them. We are yet to evaluate port operations in Japan, which might increase logistics cost," said Atul Chaturvedi, CEO of Adani Wilmar , among India's top three edible oil companies.
With a large automobile industry base, Japan is the fourth-largest consumer of rubber in the world. Rubber prices plunged to Rs 180 per kg in the spot market Monday before recovering to Rs 185 per kg on reports that rubber crashed on the Tokyo commodity exchange TOCOM.
August delivery contract took a 4.5 % hit on TOCOM while the sharp fall in April contract led to the suspension of trade in all contracts. "The initial panic in the market was to be expected," said C P Krishnan , head of commodities trading at brokerage Geojit Comtrade. "In short term, the country's economic and manufacturing activities may be affected and it may impact rubber demand.
But it won't be very substantial," said Jom Jacob , senior economist at international industry body Association of Natural Rubber Producing Countries. User industries within India are bracing for further rise to already steep raw material costs. Indian power companies, for instance, may have to pay significantly more for thermal coal in the next six months if Japan shuts down its nuclear plants and increases thermal power generation.
Debasish Mishra, senior director at consultancy Deloitte Touche Tohmatsu India said: "India imports 100 million tonne of thermal coal to meet its energy demand. If there is a spurt in demand of thermal coal from Japan, prices may go up." At present spot price of thermal coal is hovering around $130/tonne. "Over the coming weeks, LNG imports is likely to see a jump if gas-generated plants in Japan come back online and/or ramp up to replace the nuclear capacity which is likely to be offline for months, or more likely, years," he added.




atural rubber market sags on Japan tsunami effect
TUESDAY, MARCH 15, 2011

Tyre companies to wait and watch for any further price increase.
The Japanese tsunami has hit the natural rubber mart, too. The local price of the benchmark grade, RSS-4, on Monday crashed to Rs 185 a kg on the spot market, from the closing rate of Rs 201 on Friday. A month before, the Kochi market had quoted Rs 240, the highest price ever recorded.
The market is expected to be bearish for the time being, as the earthquake is likely to substantially affect consumption in Japan.
While there was no panic selling in spot trading, the undertone of the market was heavily bearish. In Japan, futures prices on the Tokyo Commodity Exchange for the March contract had closed at 446 yen/kg on Friday. They opened on Monday at 430 yen/kg and slid to 405 yen/kg. There was panic selling, with new reports on the devastation.
The August contract of rubber on the Tokyo exchange was down 4.5 per cent or 17.9 yen, reaching 383.5 yen/kg.
Other markets were also affected. In Bangkok, spot rubber prices had closed at the equivalent of Rs 265 a kg on Friday, and dropped to Rs 223 a kg on Monday.
Indian investors rushed to square off their positions in rubber, bringing down the prices. There are worries over demand from China as well, after disappointing car sales there, according to analysts. They say further lows are expected in the short term.
In Japan, Honda and Nissan, among the largest manufacturers of automobiles, have halted operations. Toyota will keep its plants shut for the next two days and Isuzu till March 18.
Hino Motors would be closed until March 18, too. Nissan has reported damage to 2,300 new vehicles and minor damages to four of its factories. Also various reports about the damage to the atomic power stations caused serious apprehensions at the commodity markets.
Reports from China, the world’s largest consumer of rubber, is also disappointing. China’s voracious demand for cars eased in February, as surging gasoline prices, the end of government subsidies and a major holiday took a toll on the world’s biggest auto market.
The China Association of Automobile Manufacturers reported that total sales, including buses and trucks, fell 33 per cent in February from the month before, to 1.27 million vehicles. Sales of passenger cars dropped 37 per cent to 967,200 vehicles.
Heavy stocking by China was a major reason behind the recent surge in rubber prices. So, a setback to Chinese consumption will have repercussions on the NR market, world over.
Meanwhile, major tyre companies are not planning an immediate change in the pricing strategy as of now. A S Mehta, director (marketing), JK Tyres told Business Standard, “We cannot change the pricing strategy based on the price on one or two days”.
He added that tyre companies were in a very difficult situation when the rubber prices went up to Rs 240 a kg. Still , the increase was not completely passed on to the customers. So, companies are waiting to see how the market would react further and if the NR price decreases, everything will go well. But, tyre prices cannot be changed immediately on the basis of the price quoted for a very short period.



Tokyo rubber futures plunge
TUESDAY, MARCH 15, 2011

Singapore (march 15, 2011) : rubber contracts on tokyo commodity exchange plunged on monday after a devastating earthquake struck japan late last week, prompting the exchange to halt trading and widened the trading band. fears that a sharp drop in physical prices could trigger a repeat of defaults of cancellations in shipments also spurred selling on tokyo futures, which have fallen more than 20 percent since striking a record at 535.7 yen a kg in february.
the most active rubber contract, currently august 2011, settled at 384.1 yen a kg, down 17.3 yen from friday's settlement at 401.4 yen. it had dropped as much as 7 percent. trading had been halted on monday morning after circuit breakers were hit and nearby contracts slumped on worries the quake could the economy and also on rumours some buyers had defaulted on shipment. "the earthquake will be the main reason but i think the rumours will be the catalyst. but people believe it's only rumour," said ker chung yang, investment analyst at phillip futures in singapore.
"i still tend to think the price may stay above 400 yen a kg. at the moment, it may be volatile. when everything settles, i think the demand will pick up soon. car production by toyota will also resume." demand from japan is expected to fall sharply as firms like toyota motor co, which suspended production until march 16, face problems with power supply and other infrastructure hurdles caused by the earthquake.
toyota motor co said on monday that it plans to suspend all production in japan at least until march 16 following friday's massive earthquake in north-eastern japan. tocom widened the trading ban for rubber futures to 50 yen a kg on monday after heavy losses following the earthquake. for rubber trading, a circuit breaker is triggered when prices swing more than 10 yen, suspending trading temporarily.
earlier this month when the market plunged sharply, it allowed prices to move as much as 40 yen up or down. china's benchmark rubber futures traded on the shanghai futures exchange fell by its daily limit on monday, tracking tocom. in the physical market, natural rubber prices dropped nearly 30 percent after reaching a record in february. benchmark thai rss3 was offered at $4.50 a kg, down from a lifetime high at $6.40 in february.
"so far we have no problems with major tyre makers but i heard rumours that china has defaulted on shipments. that is kind of on the cards, although our group, to date, is unaffected," said a dealer in singapore. thailand's government said it would intervene in the domestic rubber market to support prices, which fell sharply on monday following last week's earthquake in japan where many manufactures have suspended production, accentuating a plunge over the past month.
the cash price for unsmoked sheet (uss3) has almost halved from the record high of 180 baht per kg hit in mid-february. it was quoted at 95 baht per kg on monday, reflecting fears that demand would fall after the devastating earthquake and tsunami.




Spot rubber plummets below Rs 200 a kg
TUESDAY, MARCH 15, 2011

KOTTAYAM, MARCH 14:
Spot rubber prices nosedived on Monday. The market was reacting in tune with the global crash in commodity markets following tsunami and earthquake impact in Japan. According to sources, domestic prices fell sharply on buyer resistance amidst low volumes. Sheet rubber surrendered to Rs 184 (200) a kg according to Dealers. The grade closed extremely weak at Rs 185 (201) a kg both at Kottayam and Kochi, as reported by the Rubber Board.
The April series declined hitting the lower circuit at Rs 197.79 (206.03), May to Rs 202.62 (211.06), June to Rs 208.26 (216.93) and July to Rs 209.64 (218.37) a kg for RSS 4, while the March series remained inactive on the National Multi Commodity Exchange.
RSS 3 (spot) nosedived to Rs 223.74 (241.26) a kg at Bangkok. The March futures for the grade moved down to ¥ 405.00 (Rs 222.55) from ¥ 430 a kg during the day session and then to ¥ 387.0 (Rs. 212.64) akg in the night session on Tokyo Commodity Exchange.
Spot rubber rates (in Rs/kg: RSS-4: 184 (200), RSS-5: 180 (199), Ungraded: 175 (195), ISNR 20: 183 (197), and Latex 60 per cent: 115 (120).




B120 floor sought for rubber prices
TUESDAY, MARCH 15, 2011

Businesses are asking the government to find ways to keep rubber sheet prices from falling below 120 baht a kilogramme after a sharp fall in prices over the past three weeks.
Rubber sheet was quoted at 150 baht a kilogramme FOB yesterday in Bangkok, down from a peak of 198.55 baht on Feb 21. In Songkhla, raw rubber sheet prices were 95 baht per kg and smoked rubber sheet 105 baht.
Deputy Prime Minister Suthep Thaugsuban, the chairman of the Natural Rubber Policy Committee, said recent prices of 180-190 baht per kilogramme were too high and would only encourage the use of more petroleum-based synthetic rubber.
Phongsak Vongbundit, honorary president of the Thai Rubber Association, said the Bank of Thailand should work with commercial banks to increase credit lines to traders so they could buy rubber at low prices and delay exports until prices revive.
He said planters should not sell at below 120 baht as global demand was still higher than the supply.



Thailand Wants to Prop Up Rubber Prices
TUESDAY, MARCH 15, 2011

According to news published on the Association of Natural Rubber Producing Countries' website, Thailand's government intends to intervene in its domestic natural rubber market and support prices following their recent fall.
The country's deputy prime minister Suthep Thaugsuban is quoted as saying "we will meet exporters very soon. We need to do something to support rubber prices; they should not fall below 100 baht per kilogram."
Prices for USS3 rubber fell to 95 baht per kilogram on March 14, down from 132 baht on March 11. Since mid-February, prices for USS3 rubber have plummeted almost 50%. (Tyres & Accessories)




TOCOM to widen rubber trading range to 50 yen
TUESDAY, MARCH 15, 2011

(Reuters) - The Tokyo Commodity exchange said on Monday it will widen the trading range for its rubber futures <0#JRU:> to 50 yen per kg after 0900 GMT. For rubber trading, a circuit breaker is triggered when prices swing more than 10 yen, suspending trading temporarily.
Earlier this month when the market plunged sharply the exchange allowed prices to move as much as 40 yen up or down. (Reporting by Yuko Inoue; Editing by Michael Watson)