Rubber output not as large as growth target

Rubber output not as large as growth target

Output of natural rubber from so-called key producing countries is forecast to grow 4.8 percent to 9.77 million metric tons in 2011, the Association of Natural Rubber Producing Countries said in a monthly bulletin. The group's members account for 92 percent of global production.
The forecast was below a growth target by member governments of 8 percent with an estimated output of 10 million tons, assuming favorable weather conditions and a continuation of high prices this year, it said.
Natural-rubber supply from key growers may expand 6 percent in the first quarter as high prices attracted farmers to tap trees during the low-output season, the bulletin said.
Demand for natural rubber in China, India and Malaysia, which accounts for 48 percent of global usage, is expected to increase this year, the bulletin said. Demand in China, the largest user, may gain 9.1 percent to 3.6 million tons; India's usage may gain 5 percent to 991,000 tons and consumption in Malaysia may rise 7 percent to 490,000 tons.
Rubber futures in Tokyo have gained 15 percent this year, extending last year's 50 percent rally, as rising car sales led by China and India boost demand. The price reached an all-time high of 537.7 yen a kilogram on Feb 18.



NMCE Rubber recovers on short covering

NMCE rubber futures recovered from previous losses on active short covering on Saturday. Futures started the day on lower note on extended selling pressure. However, prices reversed the trend on short covering at lower levels and traded on positive note.
Moreover, gains were limited taking cue from negative closing on TOCOM rubber futures. TOCOM settled at ¥ 457.60 per Kg. on Friday on strong selling pressure.
The rubbers futures are projected to witness volatility today on extended short covering on previous huge losses. However, prices are likely to resume bearish trend afterwards taking cues from down spot market activity.
TOCOM rubber July futures are trading lower at ¥ 470.70 per Kg continuing the losses. Moreover, political tensions in Libya might also weigh on prices. Thus, on cues from above stated factors rubber futures are likely to witness a recovery initially however overall trend will remain weak.
Factors to Watch For
The stock of natural rubber in the country till January 30, 2011, is estimated at 3,27,115 tons, according to chairman of Rubber Board of India
People’s Bank of China has increased the interest rate by 50 basis which is pressurizing the rubber prices as China is the largest consumer of natural rubber
Natural-rubber inventories monitored by the Shanghai Futures Exchange is reported around at 58,058 tons, which is down by 62 % from last year’s highest inventory levels of 151,832 tons
According to the Association of Natural Rubber Producing Countries, Natural-rubber consumption in China and India may rise 9 percent to 3.6 million tons this year and 5.2 percent to 991,000 tons respectively
According to Passenger Car Association, passenger-car sales increased 16.2 percent Y/Y to 1.53 million last month
DERIVATIVE ANALYSIS
Indian Futures (NMCE)
The NMCE February 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. Should prices be falling when this scenario develops, the market has a higher probability of a price rise at some point forward.
Japan Futures (TOCOM)
The TOCOM active June contract, prices, volumes and open interest all are falling. If the total open interest is falling off and prices are declining, the price decline is being caused by disgruntled long position holders being forced to liquidate their positions. Technicians view this scenario as a strong position technically because the downtrend will end as all the sellers have sold their positions, creating fresh buying opportunity at lower levels.
Shanghai Futures (SHFE)
The SHFE active June contract, 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.




Natural rubber output seen up 4.8pc
MONDAY, FEBRUARY 28, 2011 ADMIN
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SINGAPORE, Feb 28 — Global natural rubber output will rise nearly 5 per cent in 2011, a senior economist of the ANRPC grouping of rubber-producing nations said today, lower than 8 per cent targeted by their governments, as record prices take their toll on yield.
“Farmers have already exploited available short-term means on the heels of abnormally high prices. Therefore, scope for further improvement in yield by short-term means is practically nil,” said Jom Jacob of the Association of Natural Rubber Producing Countries (ANRPC).
“There could be possible damage to yield potential due to unscientific over-exploitation of trees during 2010, prompted by abnormally high prices,” he told Reuters in an interview.
The ANRPC, whose members account for 92 per cent of global production, pegged output at 9.7 million tonnes in 2011, an increase of 4.8 per cent from 2010.
But governments set a more optimistic output target of 10.06 million tonnes in 2011, an increase of 8 per cent, on expectations of better weather conditions and high prices.
Natural rubber is mainly used in tyre-making.
Natural rubber prices are at an all time high above US$6 (RM18.31) a kg after a combination of dry and wet weather disrupted tapping in main producers last year, particularly in Thailand, Indonesia and Malaysia. ANRPC members include the three Southeast Asia countries as well as Cambodia, China, India, Papua New Guinea, Philippines Singapore, Sri Lanka and Vietnam?
ANRPC also accounts for 92 per cent of global export and 48 per cent of the global consumption of natural rubber.
“The existing yielding area is dominated by trees planted during the 1980s and the yields of those trees would have dropped drastically on account of ageing,” said Jacob.
“An assessment made by the ANRPC points to the supply rising by 4.8 per cent during 2011, 5.2 per cent during 2012, 6.3 per cent during 2013, 7.0 per cent during 2014 and 7.5 per cent during 2015,” he added. ANRPC also accounts for 92 per cent of global exports and 48 per cent of the global consumption of natural rubber.
High prices have prompted some buyers to withdraw from the physical market, but this move could be temporary.
Natural rubber imports by China, the world’s top consumer, dropped 14 per cent to around 147 million tonnes in January versus a year ago.
“ANRPC observes that dominant buyers have strategically withdrawn for a while. It may be a temporary break,” said Jacob.
“Given? The current growth in automobile and tyre manufacturing industries, and the huge potential available in China and India, one cannot expect?the demand slowdown to continue.”
Car sales in China rose 33.2 per cent in 2010, securing the country’s position as the world’s biggest auto market for a second straight year, official data showed.
A total of 13.8 million sedans, sport utility vehicles and multi-purpose vehicles were shipped to dealers last year, the China Association of Automobile Manufacturers (CAAM) said.
The Singapore-based International Rubber Study Group expects global demand for rubber — both natural and synthetic — to reach 25.5 mln tonnes in 2011, higher than 23.9 million in 2010. — Reuters



Asian rubber: tyre makers chase april cargo; china stays away
MONDAY, FEBRUARY 28, 2011 ADMIN
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Singapore (february 27, 2011) : tyre makers bought some quantity of indonesian rubber and demand from trading houses in southeast asia also stirred up trading, but main consumer china was on the sidelines although physical prices had dropped from record highs, dealers said on thursday.
indonesian sir20 was traded on thursday at 244 us cents a pound ($5.38 a kg) for may shipment. late on wednesday, sir20 for april delivery changed hands at 245.00 and 246.50 cents a pound ($5.40 and $5.43 a kg), with buyers including japan's largest tyre maker bridgestone. sir20 was traded at all time high of 262 cents last week.
"tyre makers such as bridgestone and goodyear are still looking for rubber but china is so quiet. sometimes you just can't rely on them," said a dealer in indonesia's main growing island of sumatra. tyre grade prices slipped from all time high after tokyo rubber futures, which set the tone for physical prices, dropped on concerns over demand from china after the lunar new year celebration.
dealers said tyre makers in china turned to domestic supply, which was sold at discount to tyre grade in southeast asia, but purchases from other consumers were still steady.
malaysia smr20 grade was sold at $5.54 a kg for april, but there were no reports of deals for thai rss3, which was offered at $6.36 a kg on thursday. "i guess china is waiting for the price to fall further. they are usually very quiet whenever the market tumbles," said a dealer in singapore.
tokyo rubber fell 1.7 percent on thursday as investors booked profits from recent record highs, while shanghai futures dropped nearly 3 percent, but tight supply because of the seasonal dry season in producing countries and strong oil prices offered support.
"at the lower price levels for rubber, routine buying activity is again seen from tyre majors in singapore for april and may loadings," said another dealer in singapore. "noticeably, march rubber is not freely available. volumes in the chinese and japanese rubber markets indicate that both profit-taking and position-rolling have featured heavily."
weekahead dealers expected buyers to buy on dips next week, although gains in tokyo futures were likely to lift prices again because of soaring oil prices. "i think nearby shipment is fully committed, and we can only offer shipment for april, may and june," said a dealer in singapore. "i think demand from china is slow because of high inventory of tyres there. they seem to be having difficulties in selling them. that's why they are reluctant to buy at this point of time." brent oil surged over 7.5 percent to its highest since august 2008 on concern the unrest that has cut more than a quarter of opec-member libya's crude output could spread to other major producers, including top exporter saudi arabia.



India Rubber Board unveils major branding initiative
MONDAY, FEBRUARY 28, 2011 ADMIN
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KOCHI (Commodity Online) : In a major branding exercise, the first-of-its-kind initiative, India’s Rubber Board has unveiled a quality certification logo for natural rubber that is expected to increase the acceptability of Indian Natural Rubber in the world market. The country is the fourth largest producer of natural rubber.
Using the quality certification logo of the Rubber Board would increase the acceptability of Indian Natural Rubber (NR) in the world market, observed Sheela Thomas, Chairman of India’s Rubber Board, the official agency entrusted with natural rubber promotion and cultivation.
The prevailing market situation, in which the international rubber prices are ruling much above the domestic prices, is conducive for export, which in turn may help Indian growers to realise international price, she added while distributing the Indian NR brand certificates to the first batch of exporters, exporting with the logo.
The certification will entitle the exporters to use the logo designed by the Board on their consignment. Branding is expected to establish Indian NR as a quality product and help it fetch a premium price, which will benefit not only the exporters, but the producers as well.
The use of logo is permitted for the export consignments conforming to the quality specifications as defined in the Green Book and by the Bureau of Indian Standards. The branding is for the shipment of R.S.S. (Ribbed Smoked Sheet), I.S.N.R. (Indian Standard Natural Rubber) and concentrated latex grades. The holographic logo stickers for sealing the export consignments are developed by C-DIT (Centre for Development of Imaging Technology).
The certificates were awarded to Pala Marketing Co-operative Society (exporting sheet rubber to Turkey), Hevea Crumb Rubber Factory and Ashok Trade Links (both exporting block rubber to Pakistan).
A good response for branding is observed from the NR exporters and more than 500 metric tons of branded rubber is expected to be shipped during the next week.




Quality logo for export rubber will fetch better prices: Rubber Board
MONDAY, FEBRUARY 28, 2011 ADMIN
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The prevailing market situation, in which the international rubber prices are ruling much above the domestic prices, is conducive to export, which in turn may help Indian growers to realise international price, said Sheela Thomas, chairman, Rubber Board.
She observed that using the quality certification logo of the Rubber Board would increase the acceptability of Indian natural rubber (NR) in the world market. She was distributing the Indian NR brand certificates to the first batch of exporters, exporting with the logo.
The certification will entitle the exporters to use the logo designed by the Board on their consignment. Branding is expected to establish Indian NR as a quality product and help it fetch a premium price, which will benefit not only the exporters but the producers as well. Such a branding of NR for export is the first of its kind to be implemented in any rubber producing country.
The use of logo is permitted for the export consignments conforming to the quality specifications as defined in the Green Book and by the Bureau of Indian Standards.
The branding is for the shipment of RSS (Ribbed Smoked Sheet), ISNR (Indian Standard Natural Rubber) and concentrated latex grades. The holographic logo stickers for sealing the export consignments are developed by C-DIT (Centre for Development of Imaging Technology).
The certificates were awarded to Pala Marketing Cooperative Society (exporting sheet rubber to Turkey), Hevea Crumb Rubber Factory and Ashok Trade Links (both exporting block rubber to Pakistan). A good response for branding is observed from the NR exporters and more than 500 tonnes of branded rubber is expected to be shipped during the next week.




Spot rubber gains
KOTTAYAM, FEB 28:
Rubber prices improved on Monday with sentiments being catalysed by recovery in domestic futuresFresh buying and short covering also lent support.

Sheet rubber improved to Rs 220 (217) a kg according to traders. The grade finished unchanged at Rs 221 (221) a kg both at Kottayam and Kochi as quoted by the Board's official website.

March contracts rebounded to Rs 223.77 (215.17) and April to Rs. 232.93 (223.98) a kg for RSS 4 on the National Multi Commodity Exchange.

Spot rates (Rs/kg) were: RSS-4: 220 (217); RSS-5: 218 (213 ); Ungraded: 215 (211); ISNR 20: 219 (216)

and Latex 60%: 142 (142 )