Rubber prices set to continue downturn-Tsunami panic to hit rubber markets next week

Tsunami panic to hit rubber markets next week
SUNDAY, MARCH 13, 2011

NEW DELHI (Commodity Online) : Global rubber markets also took its impact on Japans’ tsunami devastations though major Tocom prices remained unaffected so far as the Exchange had closed before the news broke out.
However, traders said Tocom prices will have its impact next week. Malaysian rubber prices are likely to continue to ease next week on lack of strong buying, they added.
Malaysia physical rubber prices traded lower during the week in line with weaker rubber prices on the Tokyo Commodity Exchange.
On Friday, the benchmark rubber contract on the Tokyo commodity exchange dropped 15.4 yen, or 3.7 percent, to settle at 401.4 yen ($4.84) per kg.
In Shanghai, the most active shanghai rubber contract for May delivery fell 995 yuan to finish at 35,195 yuan ($5,353) per ton.
Dealers said tocom rubber was still supported by limited supply on the fundamental side, which triggered speculative buying on the futures market below 400 yen, pushing prices above that support level.
Tocom rubber started early this week because of worries grew about the global economy; heavy stop-loss selling was seen.
Meanwhile, Indian rubber markets also witnessed hectic movements on Japan impact as prices drop sharply in country’s National Multi-Commodity Exchange (NMCE) on Friday. At NMCE , the near month March contract fell 4.43% to 20693 on Friday and presently trading further down at 20100, a decline of 2.87%.
Like many other markets, Indian rubber market also takes price guidance from rubber trades from Tocom.




Liquidity is now chasing commodities, not equity
SUNDAY, MARCH 13, 2011

Rising commodity prices could be painful for the equity markets over the next six months. With the crude oil price having run away to over USD 100 per barrel, the near-term outlook for the equity markets is strained. Apart from crude oil, many industrial commodities that form raw materials for many industries have rallied sharply due to demand and supply mismatch, and a bout of speculative buying. Copper, coal, oil, cotton, tea, coffee, and rubber are some of the commodities whose prices having been trending higher in the last few months. Liquidity that was chasing the equity markets in the second half of 2010 is now chasing commodities.
High commodity prices
Commodities are experiencing a boom due to a combination of factors. Due to weather pattern changes some amount of demand-supply mismatch has crept into all agricultural and industrial commodities . In 2010, the prices of food commodities such as rice, pulses and sugar rose sharply. As prices of food commodities have cooled down now, it seems to be the turn of non-consumable commodities such as rubber, cotton and crude oil to rise sharply.
Rubber prices have doubled. Domestic rubber spot price is trading up from Rs 160 per kg in October 2010 to an alltime high of Rs 242 per kg. The price at the international market too shot up from 297 yen per kg in August 2010 to 535 yen per kg. Demand-supply mismatch is seen in this commodity .
Excess rainfall, particularly in the rubber-producing State of Kerala had taken a toll on domestic rubber production. Flood conditions in southeast Asian countries, which are key rubber producing nations, also hit overall production.
On the other hand, the demand for rubber has escalated following a ramp-up in global auto sales. India's production of natural rubber in 2010 was around 8.5 lakh tonnes while the total demand in the country is nearly 10 lakh tonnes per year. Unfortunately, a rising rubber price is not good news for companies in the auto sector, especially tyre manufacturers.
Cotton price soaring
The story of cotton is similar. Cotton, one of the commodities experiencing a recent spurt in price, has seen its price quadruple over the past few months. Cotton prices soared making news highs every month, largely supported by strong fundamental - limited supply and high demand. In the case of cotton, it is not a decline in supply that is causing the price to rise but the sharp spike in demand.





Asian rubber: default fears resurface as tyre price tumbles
SUNDAY, MARCH 13, 2011

Singapore (march 13, 2011) : some cargoes of thai, indonesia and malaysian tyre grades changed hands around $5 a kg, but the rubber market was deserted after prices plunged 10 percent in nearly a month as speculators unwound positions on tokyo futures, dealers said on tuesday.
the rapid decline in prices reignited worries of a repeat of defaults and cancellations a few years ago, which were blamed on volatile rubber prices and the state of the global economy. "we hear a few big dealers are hammering the japanese market down in order to buy the physicals," said a dealer in singapore.
"i don't know how true that is, but the market is now dropping on the back of no real negative factors." the most active contract on tocom, currently august 2011 dropped more than 8 percent to a low of 416.5 yen a kg, its lowest since late december.
the contract hit an all-time high around 535 yen in february before profit taking kicked in, while worries that soaring oil prices could weigh on global economy also spurred selling. indonesia's sir20 was traded late on monday at 222 us cents a pound ($4.89 a kg), while malaysia's smr20 changed hands at around $5.03 a kg for april - all below record prices.
benchmark thai was done at $5.79 a kg for may, while april was offered at $5.70 on tuesday, down from a record at $6.40 in mid-february, when persisting worries about supply and erratic weather forced suppliers to scramble for raw material. thai str20 was traded at $4.98 to $4.99 for april.
buyers in top consumer china stunned the market late in 2008 when they refused to pay for their cargoes after prices plunged more than half from their peaks in the wake of a global economic meltdown that drove automakers in europe, north america and japan to their knees.
in early 2009, at least three major tyre makers cancelled their long-term contracts to buy indonesian rubber in an unprecedented move to reduce supplies as a global economic downturn slashes auto demand. "we offered sir20 last night but we didn't strike any deals," said a dealer in indonesia's main growing island of sumatra. "we haven't heard about defaults and i just hope it won't happen." late last year, indonesian rubber sellers asked buyers in china and india for down payments of up to 20 percent to dispel default fears triggered by any fall in physical prices from highs.
weekahead looking ahead, dealers expected tight supply during the dry wintering season to offer support to tokyo futures, which set the tone for physical prices, but some dealers would be careful about striking deals. "i am sure most dealers and producers are very cautious of who they sell to after 2008," said the dealer in singapore.
"i must admit i am at a loss as to why the market is falling so violently. we were expecting a correction but not to this extent especially because the dollar is weak, consumer still needs nearby rubber and we are heading towards wintering." global natural rubber output will rise nearly 5 percent in 2011, a senior economist of the anrpc grouping ofrubber-producing nations said on monday, lower than 8 percent targeted by their governments, as record prices take their toll on yield.




Rubber prices set to continue downturn
SATURDAY, MARCH 12, 2011


Malaysian rubber prices are likely to continue to ease next week on lack of strong buying, dealers said.
They said improved rubber supply in the major producing countries will weigh down the prices.
"The market tone will remain quiet as players are likely to stay on the sidelines," a dealer said.
During the week just ended, the local physical rubber prices traded lower in line with weaker rubber prices on the Tokyo Commodity Exchange (TOCOM).
On a week-to-week basis, the Malaysian Rubber Board (MRB) official daily closing price for tyre-grade SMR 20 fell 198.5 sen to 1,359.0 sen per kg from 1,557.5 sen per kg last Friday and latex-in-bulk declined 82 sen to 982.0 sen per kg.
As for the 5pm closing price, the tyre-grade SMR 20 dropped 201.0 sen to 1,349.5 sen per kg from 1,550.5 sen per kg a week before while the latex-in-bulk eased 89.0 sen to 970.0 sen per kg. –



Rubber futures on NMCE take a hit
SATURDAY, MARCH 12, 2011

The devastating earthquake in Japan generated a wave of panic not only among rubber investors in Japan, but also in India. Indian investors rushed to square-off their positions in rubber, bringing down the price by three per cent in intraday trades on the National Multi-Commodity Exchange (NMCE) today.
Taking a cue from weakness in Japanese commodity markets, Indian rubber prices dipped Rs 8.90 a kg in intraday trade on NMCE. The Indian rubber market, which takes price guidance from rubber trades in Japan-based Tokyo Commodity Exchange (TOCOM), saw heavy selling after prices started sliding on the Japanese exchange.
The April contract on TOCOM, the second largest commodity exchange for rubber trading in the world, fell from Yen 410 a kg in early trades to Yen 396 a kg, a fall of Yen 14 in the afternoon trades, indicating one of the steepest falls in the recent past. On NMCE, the last traded price of the April rubber contract stood at Rs 214.09 a kg today, as against the previous closing of Rs 223.01 a kg.
Anil Mishra, managing director, NMCE, said, “Since the Indian rubber markets get price signals from TOCOM, prices in India have collapsed three per cent in the afternoon today. This situation may not be limited to a specific commodity, but the panic may also be seen in other markets.”
Adding: “A crisis like an earthquake affect more on the financial liquidity of the system. Therefore, people run for financial safety and start exiting from the financial markets, like the commodity market. The earthquake, thereafter, generated panic among investors, which pulled down the prices of rubber significantly,” Mishra added.
According to the data provided by the director general of foreign trade, India imported rubber and rubber articles worth Rs 777.32 crore in 2009-10 compared to Rs 499.11 crore in 2008-09, an increase of 55.74 per cent. On the other hand, export of rubber and rubber articles to Japan was marginal at Rs 25.61 crore in 2009-10.




Panic selling saps spot rubber
SATURDAY, MARCH 12, 2011

KOTTAYAM, MARCH 11:
Rubber prices crashed on Friday. On the spot, the market moved down sharply in tune with domestic futures that retreated on panic selling. There were no buyers even at lower levels and it was difficult to get an actual closing price in certain counters. According to observers, the market is expected to seek further lows in short term.
In fact the commodity remained under pressure globally reacting to the news and reports of the tsunami and earthquake in Japan. Meanwhile, the National Multi Commodity Exchange rubber futures hit the lower circuit shedding the daily trading limit of 4 per cent in all contracts.
Sheet rubber nosedived to Rs 207.50 (219) a kg, according to dealers. The grade slid to Rs 212 (218) a kg both at Kottayam and Kochi, according to the Rubber Board.
The March series fell sharply to Rs 206.93 (215.55), April to Rs 214.09 (223.01), May to Rs 218.50 (227.60), June to Rs 223.12 (232.41) and July to Rs 225.12 (234.50) a kg for RSS 4 on the NMCE.
The volumes totalled 12636 lots and open interest 9989 lots. The turnover was Rs 274.90 crores.
RSS 3 (spot) moved down to Rs 241.26 (244.92) a kg at Bangkok. The March futures for the grade declined to ¥430 (Rs 236.64) from ¥446.9 a kg during the day session and then to ¥427.4 (Rs 235.20) in the night session on the Tokyo Commodity Exchange (TOCOM).
Spot rates were (Rs/kg): RSS-4: 207.50 (219); RSS-5: 205 (216); ungraded: 203 (213); ISNR 20: 209 (218) and latex 60 per cent: 123 (130).




Tokyo rubber futures slump
SATURDAY, MARCH 12, 2011

Bangkok (march 12, 2011) : tokyo rubber futures fell 3.7 percent on friday to their lowest in nearly three months as stock markets around the world tumbled on fears about unrest in saudi arabia, but support held at 400 yen per kg, dealers said. tocom prices were not affected by the worst quake to hit japan in 140 years, as the market had closed earlier.
the benchmark rubber contract on the tokyo commodity exchange dropped 15.4 yen, or 3.7 percent, to settle at 401.4 yen ($4.84) per kg.
it fell as low as 392.3 yen, the lowest since dec. 16, before rebounding slightly to finish above the major support level at 400 yen. at its low, it had fallen by more than a quarter from the record high of 535.7 yen hit in mid-february. tocom rubberstarted early this week because of worries grew about the global economy; heavy stop-loss selling was seen.
the most active shanghai rubber contract for may delivery fell 995 yuan to finish at 35,195 yuan ($5,353) per tonne. dealers said tocom rubber was still supported by limited supply on the fundamental side, which triggered speculative buying on the futures market below 400 yen, pushing prices above that support level.