Tokyo Futures Inch Up, But Uncertain Demand Limits Gains

Tokyo Futures Inch Up, But Uncertain Demand Limits Gains
TUESDAY, MAY 24, 2011

Key Tokyo rubber futures inched higher early on Tuesday (May 24) after heavy selling the previous day, but weaker oil prices and further signs of a slowdown in China, the world's top rubber consumer, limited gains.
FUNDAMENTALS
The key Tokyo Commodity Exchange rubber contract for October delivery was up 0.6 yen, or 0.2 percent, at 368.5 yen as of 0030GMT.
The most active Shanghai rubber contract for September delivery fell 655 yuan on Monday (May 23) to settle at 30,830 yuan ($4,748.128) per tonne.
The dollar was flat against the Japanese currency, but spiked to a two-month high against the euro as economic worries in Greece, Spain and Italy fanned renewed risk aversion.
U.S. crude oil fell by $1.05 to $96.65 per barrel in early Asian trade on Tuesday (May 24) on a stronger dollar due to renewed concerns over euro zone debt.
MARKET NEWS
South Korea's Hyundai Motor has stopped production of diesel engines at its Ulsan plant due to a protracted strike from component supplier Yoosung Enterprise, Yonhap news reported on Tuesday (May 24).
Toyota Motor Corp and cloud computing company Salesforce.com Inc will build a social network service that will enable owners to become "friends" with their cars and get tweet-like reminders for maintenance checks and other notices.
U.S. drivers enjoyed the biggest one-week drop in gasoline prices since December 2008, as cheaper crude oil cut costs at the pump, the Energy Department said on Monday.
Japan's Nikkei share average opened down 0.58 percent at 9,406.04 on Tuesday (May 24) after U.S. shares closed at their lowest level in a month on worries over recent weakness in global manufacturing.
(Reuters, May 24, 2011)




Rubber Production To Grow, Michelin Says
TUESDAY, MAY 24, 2011

Michelin & Cie., the world’s second-largest tiremaker, said it expects global rubber production to grow 40% in the next decade, averting a market shortage and a price surge, Bloomberg News reported.
Three-quarters of the expected output gain will come from productivity improvements by Asian producers, Managing Partner Jean-Dominique Senard told shareholders May 13 at the annual meeting near Michelin headquarters in Clermont-Ferrand, France, Bloomberg said.
Michelin said it still expects price increases to cover rising material costs, even after last month it raised its predicted negative effects on full-year profit to 1.8 billion euros ($2.6 billion) from the 1.5 billion euros predicted in February, Bloomberg said.
Michelin ranks behind Japan’s Bridgestone Corp. in global tire production.
The French tire maker is aiming to add the equivalent of a new plant globally each year to harness tire demand growth averaging 9% in emerging markets, Bloomberg said.
(Transport Topic, May 23, 2011)





Rubber Falls Most in a Week as Debt Woes Raises Growth Concern
TUESDAY, MAY 24, 2011

Rubber tumbled the most in more than a week as a reduction in Greece’s credit rating and a selloff in global equities boosted concern that the economic recovery may falter, curbing demand for the commodity used in tires.
The October-delivery contract lost as much as 4 percent to 363 yen a kilogram ($4,429 a metric ton) before settling at 367.9 yen on the Tokyo Commodity Exchange. The contract gained 1.8 percent last week, the second weekly advance.
Asian stocks extended a global decline, with the regional benchmark index heading for a two-month low, as Fitch Ratings cut Greece’s credit rating three levels and the euro weakened, reducing the outlook for export earnings. The index of U.S. leading indicators slipped in April after nine months of increases, while manufacturing in the Philadelphia area grew in May at the slowest pace in seven months.
“Concern about U.S. and European economies spurred sales of industrial commodities,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said today by phone. “Rubber was sold in tandem with oil and base metals.”
Fitch Ratings cut Greece three levels to B+, four steps below investment grade, from BB+. Fitch said even a “soft” restructuring of debt being studied by European Union policy makers would be considered a default. Fitch said Greece could face a further reduction in its creditworthiness.
“The biggest concern about Europe is the risk of contagion and of credit markets drying up globally,” said Prasad Patkar, who helps manage about $1.8 billion at Platypus Asset Management Ltd. in Sydney. “The memory of the global financial crisis is fresh in everyone’s mind, and everybody’s preference is that we don’t go there again.”
China Demand
“Supply is outpacing demand and declining inventories in China reflects that orders from there are still low,” said Chaiwat Muenmee, analyst at Bangkok-based commodity broker DS Futures Co.
Natural-rubber stockpiles monitored by the Shanghai Futures Exchange fell 215 tons to 13,946 tons last week, the bourse said on May 20. Inventories reached 11,851 tons earlier this month, the lowest level since 2003.
Rubber also declined amid expectation that supply from Thailand, the world’s largest exporter, will increase as the low-production period is set to end this month, Saito said.
Natural-rubber output will expand as farmers resume harvesting after the traditional low-production season, easing global supplies, the Association of Natural Rubber Producing Countries said in a monthly report in April.
Production from its member countries, representing 92 percent of global supply, may climb 10.5 percent to 2.3 million tons in the three months through June, the report said. Output in the first quarter is estimated to have advanced 6.1 percent to 2.27 million tons, the group said.
The physical price of Thai rubber declined 0.3 percent to 154.25 baht ($5.08) a kilogram today, according to the Rubber Research Institute of Thailand.
In Shanghai, September-delivery rubber lost 2.1 percent to close at 30,830 yuan ($4,741) a ton.
Source: http://www.bloomberg.com/news/2011-05-23/rubber-falls-most-in-a-week-as-debt-woes-raises-growth-concern.html