Tokyo rubber futures jump

Tokyo rubber futures jump
TUESDAY, APRIL 5, 2011

Tokyo (april 05, 2011) : key tokyo rubber futures jumped 4 percent to their highest in about a month on monday, supported by a weaker yen, higher oil prices and supply concerns. the key tokyo commodity exchange rubber contract for september delivery ended up 16.7 yen, or 3.9 percent, at 444.1 yen per kg. it earlier rose to 444.7 yen, its highest since march 8.
the shanghai rubber market was closed for a holiday on monday. the most active shanghai rubber contract for september delivery fell 260 yuan to finish at 34,635 yuan ($5,288) per tonne on friday. thailand, the world's biggestrubber exporter, may not produce the 3.3 million tonnes it is aiming for this year because mudslides have devastated plantation areas and further heavy rain is forecast, traders said on monday.
but the flood damage will have no impact on output or demand from no 2 producer indonesia. "flooding issues are usual, we don't have a tradition where buyers switch to indonesian rubber," suharto honggokusumo, executive director of association gapkindo told.




NR prices rise in wake of floods in southern Thailand
TUESDAY, APRIL 5, 2011

WASHINGTON (April 4, 2011) — Natural rubber (NR) prices rose strongly in Asian markets as concerns rose over the long-term effects of flooding in prime rubber-growing land in southern Thailand.
Floods and mudslides across the area killed an estimated 45 people and wiped out up to 8,000 hectares (20,000 acres) of rubber plantation land, according to estimates from the Thailand Department of Disaster Prevention and Mitigation. Using rough calculations, up to 120,000 metric tons of NR production could be lost, a Reuters story said.
Meanwhile, NR prices were bullish on the Singapore Commodity Exchange (SICOM). The April 4 SICOM price for Technically Specified Rubber 20 (tire-grade rubber) stood at $5.21 per kilogram for June delivery, while Rubber Smoked Sheets 3 was $5.80 per kilo for June delivery. In the U.S., the price of Standard Indonesian Rubber 20, the grade most often used by U.S. tire manufacturers, was $2.38 per pound F.O.B. (free on board, or at the port of origin).
NR supplies have been short this year, industry experts said, but that has generally been balanced out by reduced demand from Japan in the wake of the March 11 earthquake and tsunami. However, the latter situation probably won’t last, according to an industry source who asked to remain anonymous.
“Japan will have to replace all of those cars, and also build earthmoving equipment for the rebuilding,” the source said. “That could result in a huge backlash soon.”




Rubber import may be cheaper on duty change
TUESDAY, APRIL 5, 2011

KOCHI: Imported natural rubber will be cheaper now following a change in duty structure. The import duty of Rs 20 a kg or 20 %, whichever is lower, will lead to significant cost savings for the domestic tyre industry, besides helping companies better manage their inventory.
Following a demand by tyre makers, the government had lowered the duty on natural rubber in December to 7.5% for imports up to 40,000 tonne until March 31, after which it was to change to Rs 20 a kg or 20%, whichever is lower. "The change in duty would help in improving the availability of rubber in the market," said Vinod T Simon, president of All India Rubber Industries Association .
With rubber prices currently at Rs 233 a kg, the earlier duty of 20% would have imposed an additional burden of Rs 47 a kg on tyre manufacturers. India, the fourth-largest producer of natural rubber in the world, supplements domestic shortfall with imports.
According to estimates, rubber imports this year are likely to be around the 2009-10 level of 1.7 lakh tonne, while deficit is seen at around 90,000 tonne, against 99,165 tonne in 2009-10. While the tyre sector has estimated the deficit at 2 lakh tonne for the coming year, the Rubber Board is yet to submit a figure.
The Automotive Tyre Manufacturers Association feels imports will be unavoidable in 2011-12 in view of the high level of shortage. However, some feel the price situation will put a cap on the industry's imports.




Right time for renewed interest in rubber sector
TUESDAY, APRIL 5, 2011

MALAYSIA may have slacken in its upstream rubber activities for over two decades but the downstream side the local rubber products sector has performed remarkably well.
Last year, exports of local rubber products hit RM12.9bil, up 21.5% year-on-year and even suprassing 14.5% the pre-crisis exports recorded in 2008, according to the latest statistics from the Malaysian Rubber Export Promotion Council (MREPC).
In fact, MREPC chief executive officer Datuk Teo Suat Cheng expects higher rubber products export at about RM13.7bil this year despite facing pressure from increasing prices of raw materials and the strengthening of the ringgit.
Rubber gloves, for example, will still remain as the largest contributor to rubber products total export with over RM10bil to be achieved in 2011.
Previously, despite the country's insufficiency to supply rubber to cater for the booming integrated rubber sector, local rubber product manufacturers were still able to obtain reasonably-priced raw materials from Thailand and Indonesia.

Malaysia may need to replant some 40,000ha of rubber trees and carry out new plantings of 13,000ha a year to meet global shortage.
However, the situation has now changed drastically. Increasing prices of raw materials, the strengthening of ringgit, coupled with shortage in global rubber supply, were fast eroding the competitiveness of many local downstream rubber players.
Malaysia is currently the world's largest producer and exporter of rubber gloves, commanding about 60% of the global market share.
Given the dire situation, the Government is now focusing on replanting and new planting activities to help improve the dwindling rubber production in efforts to support the thriving local rubber products sector.
After losing many of its hectarage to oil palm plantations over the past two decades, the recent focus on rubber under the Economic Transformation Programme (ETP) holds great significance. This is because it will help restore Malaysia's position as a major producer and strengthen its competitive exporter status in the global market.
In fact, the Plantation Industries and Commodities Ministry would soon proposed to the Cabinet that an RM500mil fund be set up to undertake more rubber-planting activities in the next decade.
The renewed interest on rubber by the Government could not have come at a better time as the global market was suffering from significantly high prices due to the shortage of rubber following climate changes, leading to poor production in major producing nations.
It is slated that Malaysia would need to replant some 40,000ha of rubber trees and carry out new plantings of 13,000ha a year to meet the global shortage for rubber.
Apart from maintaining the current rubber hectarage at one million, the Government has also allocated additional zoning of one million ha by exploiting suitable land bank in Sabah and Sarawak.
The maximum assistance for replanting rubber in Sabah and Sarawak is RM10,000 per ha compared with RM7,000 per ha in the peninsula. At present, there are 380,000 smallholders nationwide who contribute 90%, or about 900,000 tonnes, of the country's annual rubber production.




Japan Commodity Bourse 2010/11 Loss Wider Than Expected
TUESDAY, APRIL 5, 2011

Tokyo Commodity Exchange said on Tuesday (Apr 5) it expects a recurring loss of around 800 million yen ($9.5 million) on a parent basis for the financial year that ended on March 31, nearly double the loss initially forecast.
Japan's largest commodity exchange had initially forecast a recurring loss of about 300-400 million yen for fiscal 2010/11.
For the month of March, trading in oil products and precious metals increased from February as global markets surged on tensions in the Middle East.
But the destructive earthquake and tsunami that devastated wide areas in north eastern Japan on March 11 caused a sharp drop in activity on the exchange, weighing on trading volumes.
"Had it not been for the earthquake, we would have done better and trading volumes for the entire fiscal year could have turned positive from a year earlier," TOCOM President and CEO Tadashi Ezaki told a regular news conference.
Trading volume for fiscal 2010/11 stood at 28,003,737 lots, down 0.1 percent from a year earlier.
In the few days immediately after the quake, open interest shrank sharply, probably due to foreign investors closing positions, Ezaki said. Open interest at the end of March stood at 290,274 lots, falling below 300,000 for the first time in about six months.
"Trading regained some calm in the last few days of March and open interest is on the rise," Ezaki said, but added that the outlook remained uncertain, pending developments at Tokyo Electric Power Co's , Fukushima Daiichi nuclear plant, where engineers are struggling to control radiation leaks and prevent further reactor meltdowns.
(Reuters, April 5, 2011)