Tokyo futures up 2.3 pct on firmer oil, stocks

Tokyo futures up 2.3 pct on firmer oil, stocks


BANGKOK, March 1 - Tokyo rubber futures rose 2.3 percent to near a one-week high on Tuesday on strong oil prices and a recovery stock markets, but concerns of unrest in Libya added downward pressure, dealers said.
* The benchmark rubber contract on the Tokyo Commodity Exchange <0#JRU:> for August delivery rose 10.7 yen to settle at 477.1 yen per kg. It rose as high as 484.1 yen per kg, the highest since Feb 24.
* The most active Shanghai rubber contract for May delivery also rose 50 yuan to settle at 39,365 yuan per tonne.
* Japan's Nikkei average clawed back towards 10-month highs and rose 1.2 percent on Tuesday as foreign investors piled into Japanese stocks on a lower inflation risk.[ID:nTOE72004X]
* Brent crude rose above $112 a barrel on Tuesday as continued unrest in the Middle East and North Africa threatened to further reduce crude supplies even as Saudi Arabia ramped up output to cover Libyan exports. [O/R]
* TOCOM rubber were expected to rise further to test the next resistance of 480 yen per kg on Wednesday after prices finished above a key psychological support level of 475 yen per kg, dealers said.




NMCE Rubber gains on fresh buying

NMCE rubber futures extended the gains on fresh buying at lower levels on Monday. Futures started the day on positive note on short covering. However, prices took decent corrections during the day taking cues from down TOCOM futures.
However, later in the day TOCOM August futures witnessed a good recovery on short covering at lower levels and settled at ¥470.50 per Kg. However, prevailing rainy conditions in major rubber growing region of Kerala supported the upside in prices. Domestic spot market also witnessed a moderate positive trend.
Thus on cues from spot market rubber at NMCE platform traded higher and ended up hitting 4% upper circuit.
The rubbers futures are projected to extend the gains on fresh buying on previous huge losses on Tuesday. Taking cues from positive spot market activity prices at futures might remain higher.
TOCOM rubber July futures are also trading up at ¥479.0 per Kg continuing the previous recovery. Moreover, political tensions in Libya are also easing down which might also support the prices. Thus, on cues from above stated factors rubber futures are likely to continue the recovery today.
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, volumes and open interest all are rising. Market is attracting larger numbers of traders willing to open positions from the long side and hold them. Traders are more confident that prices will continue to climb in favor of a working long.
Japan Futures (TOCOM)
The TOCOM active August contract, prices and open interest are rising while volumes are falling. Market is attracting late buyers & early shorts; market is vulnerable to a sharp correction but likely that that correction will be bought creating a buy point for uptrend.
Shanghai Futures (SHFE)
The SHFE active July contract, prices, volumes and open interest all are rising. Market is attracting larger numbers of traders willing to open positions from the long side and hold them. Traders are more confident that prices will continue to climb in favor of a working long.



Rubber To Rise Amid Increased Demand, Low Supply

Rubber has slumped 15 percent in the last week, but analysts see the slump as a prelude to record highs. Prices may advance by up to 32 percent to 605 yen a kilogram ($7,407 a metric ton) by December, according to the median estimate in a Bloomberg survey. Bridgestone (OTC: BRDCY) and Michelin are responding to raw material price increases by raising their own prices as much as 15 percent.
According to Bloomberg, the expected raw material price increase is due to lower supply yields in Thailand, Indonesia, and Malaysia, where the biggest rubber growers are established. There, the top growers will fail to meet demand for the second year. Goldman Sachs estimates that stockpiles on hand are tantamount to only 69 days of demand, the lowest numbers in more than a decade.
Michelin responded on February 11th by saying that higher material costs would cut about 1.5 billion euro ($2 billion) from its 2011 profits.
Tire companies worldwide have responded to higher raw material costs by passing on larger prices to customers. Michelin is raising tire prices in Europe by up to 7.5 percent, and an average of 8 percent in Japan. Tokyo-based Bridgestone is increasing North America prices by 8 percent on April 1st, and by as much as 15 percent in Japan on June 1st.
Additionally, Japanese tire maker Sumitomo Rubber Industries is boosting prices by up to 10 percent from May. The company forecasts a 58 percent profit tumble from the previous year. Bridgestone said on February 18th that it expects to report a 17 percent profit drop due to higher material costs and as a result of a stronger yen.
The price rise is expected to continue due to increased demand and a continued supply incapable of meeting that demand. In Southeast Asia, heavier-than-usual rain has disrupted harvests. Even as farmers increase supply by 9 percent, Goldman analyst Yuichiro Isayama of Tokyo notes that farmers will not eliminate shortages, as demand picks up to its highest level since 2000.
Bloomberg attributed the recent price decline to the slump across commodities and equity markets due to the conflict in Libya and after the removal of leaders in both Tunisia and Egypt.
Prices for rubber could reach as high as 1,200 yen by year's end, according to Masao Kondo of Tokyo-based Commodity Intelligence. The price gained 0.9 percent, to 470.50 yen, in after-hours trading today. Kondo correctly predicted record prices in September, according to Reuters.
Even if demand weakens, plantations in Thailand, Malaysia, and Indonesia are in a wintering period, with output dropping by up to 60 percent.
Said D.P. Singh, vice president of consumer business Goodyear India, "The entire industry is going through very challenging times . . . Commodity prices are going up across industries but the tire industry is especially hard hit."
According to Hisaaki Tasaka, a Tokyo-based analyst at brokerage firm ACE Koeki, "Rubber users don't have much raw material stockpiled, so they have no option but to keep buying."



Branding to raise status of Indian natural rubber in world mkt

Kottayam, Mar 1 (PTI) Indian rubber growers are set to reap the benefits of the prevailing price scenario, where international rates are ruling higher than domestic spot prices, thereby enabling them to demand more for their produce, the Rubber Board said today.
And using the quality certification logo of the Rubber Board will increase the acceptability of Indian Natural Rubber (NR) in the world market, Rubber Board Chairperson Sheela Thomas said in a statement here.
Distributing Indian NR brand certificates to the first batch of exporters to receive the logo, she said the certification would establish Indian natural rubber as a quality product and will help it fetch a premium price. This will benefit not only exporters, but producers as well.
Such branding of NR for exports is the first to be implemented in any rubber-producing country, she said.
The use of the logo was permitted for export consignments conforming to quality specifications as defined by the Bureau of Indian Standards, she said.
The branding is for the shipment of RSS (Ribbed Smoked Sheet), ISNR (Indian Standard Natural Rubber) and concentrated latex grades of rubber. The holographic logo stickers for sealing export consignments have been developed by the Centre for Development of Imaging Technology (C-DIT), she said.
The certificates were awarded to the Pala Marketing co-operative Society, which exports sheet rubber to Turkey, besides Hevea Crump Rubber Factory and Ashok Trade Links, which both export block rubber to Pakistan.



Natural rubber output to fall behind estimates

BEIJING (Commodity Online) : Natural rubber output from the rubber producing nations would lag behind the projected estimates, according to a report from the Association of Natural Rubber Producing Countries.
But high prices are prompting farmers to tap rubber in the off-season, reported Peoples Daily of China.
The output from rubber producing nations is expected to grow by 4.8% to reach 9.77 million tons, down from a projected 8% output which pegged figures at 10 million tons.
Supply from key growers is expected to climb 6% in the first quarter even as demand is surging in China (3.6 million tons), India (991,000 tons) and Malaysia (490,000 tons).
In fact, natural rubber price have been surging across the globe.
Rubber futures in Tokyo have gained 15 % in 2011where as last year the rally added 50 percent to prices. The growth story that is India and China, reflected in their rising car sales have fuelled this price rise.