Japan Auto Output Slumps After Quake, Toyota To Lose Crown Toyota

Japan Auto Output Slumps After Quake, Toyota To Lose Crown Toyota
MONDAY, APRIL 25, 2011

Toyota Motor Co is set to lose its crown as the world's largest automaker after Japan's earthquake and nuclear disaster slashed local output by almost two-thirds in March.
Japan's auto sector has been hit hard by the disaster due to a shortage mostly of electronic and resin-based parts in the wake of the magnitude-9.0 earthquake and resulting tsunami, as well as damage to a major nuclear plant which disrupted power supplies.
Toyota said last week it could take until the end of the year before production fully recovered.
The world's largest automaker said domestic production fell 62.7 percent to 129,491 units in March, while Japan's No.2 Nissan Motor Co said its corresponding figure fell 52.4 percent to 47,590 units.
Honda Motor Co said domestic production shrank 62.9 percent to 34,754 vehicles.
Toyota is now almost certain to lose the top producer ranking it has held since 2008 to General Motors this year. Toyota sold 8.42 million vehicles last year, topping GM's 8.39 million.
Koji Endo, managing director of Advanced Research Japan in Tokyo, said Toyota was now on track to post sales of around 6.5 million units this year.
"Most likely GM will produce 8 million-plus and Volkswagon will produce around 7 million, so most likely Toyota will be third, GM will be first," Endo said.
Toyota, criticised by some analysts and investors for its aggressive expansion in the early 2000s, played down the prospect of losing its top ranking.
"When Toyota became No. 1 there were no champagne corks going off here," said Toyota spokesman Paul Nolasco. The March sales were the worst since records began in 1988, he added
Japanese automakers have not forecast what impact the production cuts will have on earnings, but analysts have been slashing their forecasts since the disaster.
"In overseas markets consumers have choices and (non-Japanese makers) probably will take some share, but I think it is an open question if those will be sustainable or temporary share changes -- my guess is that they will tend to be temporary," said Christopher Richter, an auto analyst at CLSA Asia-Pacific Markets in Tokyo.
"Probably the negative news is in the share prices and it is just a matter of time before some of this positive news starts to get imputed into share prices."
Shares in the major automakers were slightly weaker on Monday (Apr 25), with Toyota down 0.5 percent, Honda down 1.3 percent and Nissan 1.7 percent lower.
Tokyo's transport equipment sub-index has bounced about 14 percent from its post-quake low, but is still more than 6 percent below where it was before the disaster struck.
In contrast, South Korea's Hyundai Motors has surged 30 percent over the same period, hitting a record high last week on expectations it will benefit from the woes of its Japanese rivals.
"These are good times for South Korean carmakers. They will gain market share, raise utilization rates," said Park Jong-min, a fund manager at ING Investment Management in Seoul. "They will also reduce incentives, which will help cut costs."
The disaster has been a major setback for the world's third-largest economy, with exports falling faster than forecast in March and industrial output data due on Thursday (Apr 28) expected to show a record decline. Some economists expect industrial production to fall as much as a quarter, month-on-month, in March.
Uncertainty on the earnings outlook is likely to linger well into the financial year which started on April 1. Many companies are expected to refrain from giving 2012 earnings guidance during the current fourth quarter reporting season and those that do are expected to paint a bleak picture.
"One source of concern is that analysts have not cut their estimates for the current year by very much," said Koji Toda, chief fund manager at Resona Bank in Tokyo. "I think many are leaving their figures unchanged because they don't have enough information to decide how far to cut them."
For Toyota, 11 analysts who revised their forecasts after the earthquake forecast an average operating profit of 281.9 billion yen for the year to March 2012.
That is down 65 percent from the consensus of 804 billion yen from 21 analysts before the quake, according to Thomson Reuters I/B/E/S. Toyota announces its results on May 11, but it is not certain if it will provide its own forecast.
(Reuters, April 25, 2011)




Acquire foreign land to promote rubber cultivation: IRDF
MONDAY, APRIL 25, 2011

KOCHI (Commodity Online): Indian Rubber Dealer’s Federation (IRDF) has suggested the India government to acquire land in other countries and encourage rubber cultivation.
China is already having an early bird advantage in this regard. The country, one of the biggest consumers of natural rubber is acquiring plantations in other regions(South East Asia and Africa) with suitable climate to enhance rubber output, Financial Express reported.
Sri Lanka can be a possible destination for India in this regard, IRDF President George Valy, said.
There is limited scope for expansion in rubber cultivation in Kerala, Tamil Nadu and North East. Demand supply-gap in the 2010-11 fiscal stood at 87,255 tons, as compared to 99,165 tons in the previous year.
In January, there were reports that Harrisons Malayalam(HM), India’s largest rubber plantation and top producer of natural rubber was scouting Ethiopia, Cameroon, Ghana and Indonesia for acquiring plantations.
Besides, HM have plans for India’s North Eastern state of Tripura, where the conditions have been proven to be ideal for rubber plantations.
The company already owns 7000 ha in plantations but is producing only half of its total annual capacity of 10,000 tons, reported The Financial Express in November.
HM may opt for a JV or leasing of land to the tune of 10,000 ha, as demand from tyre, latex, sports good and glove manufacturers surge, said the report.
A high level working group of the Government of India last year had given approval for the acquisition of farm lands in foreign countries.
The government is said to have offered full support for Indian companies in this regard.
Arable land in India is shrinking like never before. In 2005, the arable land accounted for 48.83 % of the country. But now, it has shrunk drastically with increasing urbanization.
The idea of farm land outsourcing is not new, given the fact that many major cash-rich economies have started this long before. Over 20 million hectares of land has already been sold, globally as on November 2010.
China, Saudi Arabia, and South Korea top the charts on this account. Japan, a big player, has acquired lands in foreign countries thrice the size of its domestic farm fields!
The only deterrent in this endeavour is the local resistance that may come along with acquisition of farm lands. This trend is very much evident in countries like Mozambique and Madagascar.




Asia Rubber: Tyre grade slips on demand fears; China shy away
MONDAY, APRIL 25, 2011

SINGAPORE, April 25 — Prices of tyre grade slipped today as rubber futures tumbled on fears about weakening demand from auto makers, while main consumer China turned to cheaper cargo kept in domestic warehouses, dealers said.
Indonesia’s SIR20 grade changed hands late last week at US$4.885 (RM14.655) a kg for June shipment, down from US$5.68 a kg offered last Monday. Malaysia’s SMR20 was traded slightly above $5 as sellers struggled to find consumers.
The physical market bore the brunt of selling on Tokyo and Shanghai rubber futures as sentiment turned bearish after a devastating earthquake hit auto production in Japan, and China tightened the economy.
Toyota Motor Co is set to lose its crown as the world’s largest automaker after Japan’s earthquake and nuclear disaster slashed local output by almost two-thirds in March.
“I think we are lucky if we can still sell rubber at US$5 a kg. We offered rubber at US$4.87 but nothing happened,” said a dealer in Indonesia’s main growing island of Sumatra.
“The market is moving so fast and prices can change from morning to afternoon. Prices in China are already quite low,” he added.
The most active contract on Tokyo Commodity Exchange, currently October 2011 hit in intraday low of ¥395.4 a kg, its weakest since late March — well below a lifetime high around ¥535 struck in February.
Thai’s RSS3 grade, often regarded as a benchmark physical price, has slipped more than 8 per cent since hitting a record at US$6.40 a kg in February to track declines in futures market, although erratic weather in producing countries helped cushion the fall.
There were no deals for RSS3 and another Thai grade, STR20, as Chinese buyers switched to rubber already stored in warehouses on worries that Beijing’s monetary tightening could slash demand.
China’s turbo-charged growth eased just a touch in the first quarter, while its inflation jumped to a 32-month high, putting pressure on the government to do more to rein in prices and keep the economy on an even keel.
Dealers said SIR20 fetched a discount of up to US$100 to the prices quoted by dealers in Southeast Asia, while Thai grades were around US$20 cheaper as overstocked Chinese importers cut prices to attract tyre makers.
Week ahead
Worries about demand were likely to persist in coming weeks, but China could be tempted to buy on dips if domestic inventories kept falling.
Rubber inventories in warehouses monitored by the Shanghai Futures Exchange fell 7.7 per cent to 14,717 tonnes last Friday.
“We will be very happy if we can sell rubber at US$5 today because the market has gone down so much. Rubber in China is cheap and there’s a big discount there,” said a dealer in Singapore. “Prices in China are below US$5 a kg.” — Reuters




Tokyo Futures Ease On Stronger Yen, In Narrow Ranges
MONDAY, APRIL 25, 2011

Key Tokyo rubber futures eased on Monday (Apr 25) as a stronger yen hurt sentiment, but prices stayed in narrow ranges ahead of Japan's Golden Week holidays.
FUNDAMENTALS
The benchmark rubber contract on the Tokyo Commodity Exchange for October delivery, which debuted on Monday (Apr 25), stood at 408.5 yen per kg as of 0030 GMT.
The previous benchmark for September delivery was down 1.4 yen at 417.6 yen, after settling Friday (Apr 22) up 1.6 percent or 6.7 yen at 419.0 yen.
Deliveries against the April rubber futures contract, which expired on Friday (Apr 22), were 305 lots or 1,525 tonnes, the smallest amount in four months.
The most-active rubber contract on the Shanghai Commodity Exchange for September delivery rose 270 yuan to settle at 34,780 yuan ($5,355.772) per tonne on Friday (Apr 22).
Oil was up in early trade on Monday (Apr 22), supported by a weak dollar.
The dollar stayed under pressure near a three-year low against a basket of currencies.
(Reuters, April 25, 2011)