Rubber hits 3-month low at Rs 210

Rubber hits 3-month low at Rs.210
June 27, 2011


New Delhi, Jun 27 (PTI) Natural rubber prices today fell by Rs 6 to hit a nearly three month low of Rs 210 per kg in line with the fall in prices in the global markets.

Natural rubber prices on Saturday were ruling at Rs 216 per kg in the domestic markets, according to the Rubber Board.

“Prices of natural rubber have fallen due to weak global markets that have been affected because of reports of China”s growth not being on projected lines,” Cochin Rubber Merchants Association Ex-President N Radhakrishnan told PTI.

According to Radhakrishnan, reports indicate that economic growth in China – the largest consumer of natural rubber — is not on projected lines.

The rate of natural rubber in the international physical market at Bangkok today fell by Rs 3.17 to Rs 209.46 per kg as compared to Rs 212.63 per kg on June 24, the Rubber Board data said.

Analysts also attributed the fall in the domestic markets to the global prices of crumb rubber, that are ruling at Rs 193-194 per kg signifying strong possibility of import by domestic consuming industry.

The future markets both domestic and international also have been down, which have further affected the domestic spot prices.

At the National Multi Commodity Exchange (NMCE), rubber future prices for July delivery lost Rs 383 at last trading price at the end of today”s first session at Rs 20,699 per quintal.

TOCOM (Tokyo Commodity Exchange) that were weak during the day recovered after the afternoon session with futures prices for July delivery ruling 361.4 yen (Rs 201.36), slightly up by 3.4 yen (Rs 1.89), from its last settlement price.

According to analysts, the weak trend could continue further due to sluggish demand from the domestic consuming industry, which is facing high inventory costs and low global prices that indicate increased prospect for imports.





Spot rubber slips on buyer resistance


KOTTAYAM, JUNE 28:
Physical rubber prices weakened on Tuesday. The market slipped further on buyer resistance extending the previous day's steep declines. According to sources, the losses were limited on marginal improvement in domestic futures and there were no quantity buyers in the trading houses even during the closing hours.

Except supply, all factors now stay unfavourable to natural rubber (NR) market according to the Association of Natural Rubber Producing Countries. While supply of NR continues to be low, the market sentiments are slightly overweighed by growing concerns about global economy; a weak demand for the commodity; depreciation of Thai baht, Malaysian ringgit and Indonesian Rupiah against the dollar; and strengthening of Japanese yen.

In spot, sheet rubber slipped to Rs 206 (207) a kg, according to traders. The grade weakened to Rs 207 (210) a kg both at Kottayam and Kochi, as reported by the Rubber Board.

In futures, the July series recovered partially to Rs 208.30 (206.73), August to Rs 209.42 (207.37), September to Rs 208.10 (206.57), October to Rs 207.25 (204.99), November to Rs 210.90 (208.23) and December to Rs 211.45 (210.05) a kg for RSS 4 on the National Multi Commodity Exchange.

RSS 3 (spot) dropped to Rs 207.49 (209.46) a kg at Bangkok. The July futures closed unchanged at ¥358.0 (Rs 199.37) a kg during the day session but then improved marginally to ¥361 (Rs 201.08) in the night session on the Tokyo Commodity Exchange.

Spot rates were (Rs/kg): RSS-4: 206 (207); RSS-5: 204 (205); ungraded: 201 (202); ISNR 20: 203 (206) and latex 60 per cent 132 (132).








Tokyo futures rebound but gains seen limited
June 28, 2011



TOKYO, June 28(Reuters) – Tokyo rubber futures climbed 2.2 percent early on Tuesday after shares rallied and oil prices rose on easing worries over Greece, but gains will likely be limited as downward pressure remains strong amid lingering uncertainty over the global economy.

FUNDAMENTALS

* The key Tokyo Commodity Exchange rubber contract for December delivery <0#2JRU:> was up 7.5 yen, or 2.2 percent, at 352.5 yen per kg as of 0040 GMT. The benchmark index fell as low as 344.0 yen, its lowest since mid-March, on Monday.

* The most-active Shanghai rubber contract for September delivery dropped 1,425 yuan on Monday to finish at 30,725 yuan ($4,745.169) per tonne.

* The dollar fell against the yen and euro as investors bet Greece’s parliament will approve a fiscal austerity package needed for the country to get emergency aid and avoid defaulting on its debt.

* Brent crude oil futures settled higher on Monday, lifted by the euro’s gains against the greenback.

* Rubber supply in Thailand, the world’s biggest rubber producer and exporter, will likely rise further in July as rains stopped, allowing farmers to tap more latex.

* For the top stories in rubber market and other news, click , or

MARKET NEWS

* Nissan Motor outlined plans to boost both its global market share and profit margin to 8 percent within six years, promising a new vehicle every six weeks on average to woo consumers away from rivals.

* The Nikkei average jumped on Tuesday, tracking gains in Wall Street shares.

* U.S. stocks gained following three days of losses on Monday, led by banks after news of more favorable capital requirements and optimism over Greece’s austerity plan.







Rubber stocks gain on customs duty abolish news
June 28, 2011



Finance Ministry may abolish customs duty on rubber up to 1 lakh tonne, reports CNBC-TV18. The Commerce Ministry has proposed removal of 20% duty on the commodity likely due to rising domestic rubber prices.

Ceat touched an intraday high of Rs 103.95 and an intraday low of Rs 94.70. At 13:09 hrs the share was quoting at Rs 103.00, up Rs 7.80, or 8.19%. It was trading with volumes of 181,741 shares.

JK Tyre and Industries touched an intraday high of Rs 102.60 and an intraday low of Rs 95. At 13:08 hrs the share was quoting at Rs 101.85, up Rs 7, or 7.38%. It was trading with volumes of 58,391 shares.

Apollo Tyres touched an intraday high of Rs 78.90 and an intraday low of Rs 76.60. At 13:08 hrs the share was quoting at Rs 78.50, up Rs 2.15, or 2.82%. It was trading with volumes of 536,746 shares.

Goodyear India touched an intraday high of Rs 327.70 and an intraday low of Rs 314. At 13:07 hrs the share was quoting at Rs 324.80, up Rs 9.40, or 2.98%. It was trading with volumes of 29,535 shares.

MRF touched an intraday high of Rs 6,870 and an intraday low of Rs 6,618. At 13:08 hrs the share was quoting at Rs 6,840, up Rs 259.85, or 3.95%. It was trading with volumes of 6,543 shares.








Oil falls as Greek debt worries persist
June 28, 2011



SINGAPORE (Reuters) – Brent fell towards $105 a barrel on Tuesday as concerns of the debt crisis spreading across Europe dogged investors despite a radical French proposal to rollover Greek debt.

President Nicolas Sarkozy said that French banks had reached a draft agreement with the authorities on a voluntary rollover of maturing bonds, as markets anxiously awaited the outcome of a vote in Greece to approve unpopular fiscal austerity measures.

ICE Brent crude for August was down 49 cents to $105.50 a barrel by 0600 GMT (7 a.m. British time) after hitting an intraday high of $106.84. U.S. crude fell 4 cents to $90.57 barrel, but it held above the front-month 250-day moving average of $89.45.

“Crude oil markets are retreating from the early rally in the absence of positive newsflow,” ANZ analyst Serene Lim said. “Investors are cautious ahead of the key Greek parliamentary votes tomorrow.”

Investors are still watching to see if Greece’s parliament will approve austerity steps that are a precondition for international aid that the country needs to avoid a default.

Prices were expected to remain volatile as some investors were still worried about the result of the Greek vote, said Ken Hasegawa, a commodity sales manager at Newedge Japan.

“WTI may be supported around $90, but any upside will be limited because of concerns about the economy in the euro zone,” he said.

This could keep Brent’s premium to WTI in a range between $13 and $15 a barrel, he added.

EURO EYED

The euro was steady on Tuesday and the dollar slightly weaker against major currencies <.DXY>, stalling just below chart resistance, as investors awaited the Greek vote.

Without approval, the European Union and the International Monetary Fund say they will not disburse the fifth trance of Greece’s 110 billion-euro bailout programme. Athens needs the aid to pay its bills next month and avert the euro zone’s first sovereign default.

“If they fail to get an agreement, oil prices will fall,” Hasegawa said.

A surprise announcement by the International Energy Agency to release oil from strategic reserves has likely been priced in after Brent fell 7 percent last week, he added.

“Fundamentally, I don’t think that will have a big impact on the market … as the 60 million barrels of oil can be absorbed easily,” he said.

South Korea will start to release 3.46 million barrels of oil, including 2 million barrels of crude and 1.46 million barrels of products by “today at the earliest,” a source at the economy ministry said.

A drop in prices may lift gasoline consumption in the United States, Hasegawa said, easing concerns of demand destruction at the world’s largest oil user.

The market is also gearing up for a fall in crude inventories in the United States in industry data due late Tuesday. Analysts are expecting stocks to shrink for the fourth week in a row.

Investors were also watching events in Libya, after the International Criminal Court issued an arrest warrant on Monday for leader Muammar Gaddafi, and rebels trying to oust him said their forces had advanced to within 80 km (50 miles) of the capital.







Tokyo futures hit 3-1/2 month low on supply, Euro debt crisis
June 27, 2011




BANGKOK: Tokyo rubber futures tumbled to 3-1/2 month low on Monday, weighed by rising supply in major producing countries and concerns about Europe’s debt, which has triggered a broad sell-off in commodities, dealers said.

The benchmark rubber contract on the Tokyo Commodity Exchange for December delivery fell 8 yen, or 2.3 percent, from the opening prices to settle at 345.0 yen ($4.289) per kg.

It fell as low as 344.0 yen, the lowest since mid-March.

The front-month June contract expired on Friday and deliveries against the June rubber futures contract fell 39 percent from May to 146 lots or 730 tonnes.

The most-active Shanghai rubber contract for September delivery fell 1,425 yuan to finish at 30,725 yuan ($4,745.169)per tonne.

“Rubber could fall gradually due to rising supply in Thailand, but we have another big negative factor of Europe debt concerns that dragged TOCOM prices down deeper than expected,” one dealer said.

Greece’s parliament begins on Monday to debate a deeply unpopular austerity plan which international lenders are demanding to see approved this week to avert the threat of bankruptcy.

Rubber supply in Thailand, the world’s biggest rubber producer and exporter, was expected to rise further in July as rains stopped and allowed farmers to tap more latex, said a trader in Thailand’s southern Hat Yai rubber centre.

However, traders said they expected TOCOM prices to rebound on Tuesday, expecting prices to find a strong support level at around 340 yen, while demand on the physical front should lend support.





OIL PRICES LOWER, DOWN 8% IN 2 WEEKS
June 27, 2011


New York oil prices fell further on Monday, while London Brent surged amid easing supplies and fears of a default by debt-ridden Greece which could hit demand for energy.

New York’s main contract, West Texas Intermediate (WTI) light, sweet crude for delivery in August, dropped 55 cents to close at $US90.61 a barrel.

WTI has fallen around eight per cent in the past two weeks, and was hit hard last week when the International Energy Agency decided to tap strategic oil stocks in a bid to rein in high-flying energy prices.

In London, Brent North Sea crude for August delivery gained 88 cents to close at $US105.99 a barrel on the Intercontinental Exchange, regaining some ground after it shed about nine dollars on Thursday and Friday.

Analysts said the markets were still reeling from the IEA’s surprise move to release 60 million barrels over the course of a month, half of which will come from the United States’ strategic petroleum reserve (SPR).

“The SPR is definitely weighing on the market,” said Richard Ilczyszyn, senior market strategist at Lind Waldock.

“In this time of the year, I wouldn’t expect the market to do a whole lot because we’ve had a pretty good sell-off. I don’t think the market can break much lower than that because we are still in driving season.”

The IEA, which represents 28 oil-importing countries, authorised last week’s drawdown to make up for lost output from Libya, where a mass uprising against leader Moamer Kadhafi has practically halted oil production.

Also clouding the US market was new data showing that American consumers have tightened spending.

The Commerce Department reported Monday that consumer spending in May was virtually unchanged from April — a sign of how sluggish the economy has become, and how much high gasoline prices had impacted US households.

Ker Chung Yang, an analyst with Phillip Futures in Singapore, said that investors remained concerned over the possible fallout from Greece’s debt crisis.

“Crude oil prices will stay volatile as the greater concern is still on Greece and the overall recovery of the US economy,” Ker said.

Greece faces a momentous battle in parliament this week to quash dissent over additional austerity reforms needed to secure a vital new bailout from the European Union and the International Monetary Fund.

The EU and IMF have been struggling to prevent a default by Greece that could have potentially destabilising effects throughout the eurozone and beyond.





Oil near $91 as Greece austerity vote awaited
June 28, 2011


SINGAPORE (AP) — Oil prices inched higher to near $91 a barrel Tuesday in Asia as investors mulled whether Greece will approve more austerity measures this week to receive the next round of international aid and avert a debt default.

Benchmark oil for August delivery was up 26 cents to $90.87 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. Crude fell 55 cents to settle at $90.61 on Friday.

In London, Brent crude for August delivery was down 3 cents to $105.96 a barrel on the ICE Futures exchange.

Greek lawmakers will vote Wednesday on a $40 billion austerity plan, government spending cuts that European officials say are a necessary condition to receive the next installment of Greece’s $156 billion bailout loan from the European Union and the International Monetary Fund.

If Greece rejects the cuts, it could lead to a debt default and spread instability in other financially troubled European countries.

“Most observers expect the Greeks to understand just how much is at stake,” energy consultant Cameron Hanover said in a report. “Contrarians argue that Greece’s people may decide there is less pain in a default than in austerity.”

Weakness in the U.S. economy is also on the radar. The Commerce Department said Monday that U.S. consumer spending was unchanged in May, the worst result since September 2009. When adjusted for inflation, spending dropped slightly.

In other Nymex trading in July contracts, heating oil slipped 0.5 cent to $2.76 a gallon while gasoline gained 1.6 cents at $2.82 a gallon. Natural gas futures rose 2.3 cents at $4.28 per 1,000 cubic feet.





Tyre makers rise on falling rubber prices; Ceat up 15 pct
June 28, 2011


Shares of tyre manufacturers were trading sharply higher on fund buying tracking a fall in natural rubber prices, several dealers said.

Spot rubber price has fallen over 6 percent since the beginning of this month to 21,000 rupees per 100 kg in the key Kottayam market in Kerala, data with the state-run Rubber Board showed. Prices of rubber constitutes 40 percent of the tyre production cost.

At 3.02 p.m., shares of Ceat , JK Tyre and Industries , MRF Ltd and Apollo Tyres were up 3-15 percent.







Who Says China Inflation is Under Control
June 28, 2011




On June 23 the Financial Times carried an article written by China’s Prime Minister Wen Jiabao in which he argued that macro-economic measures taken by the government over the last year had contained inflation. Since 2010, the government has increased required reserve ratios 12 times for banks and quadrupled interest rates.

Wen’s remarks calmed investors, who were hoping that cooling policies were reaching an end. The Shanghai A-share index (Shanghai Stock Exchange: .ssea) shot up 2.16 percent, and Hong Kong’s Hang Seng (Hong Kong Stock Exchange: .hsi) 1.90 percent the day after Wen’s article was published.

On Monday, however, Wen, who is traveling to Europe, was quoted by the Hong Kong Media as saying for the first time that China will find it hard to keep inflation below 4 per cent in 2011. The markets though chose to react more to his earlier remarks.

Conventional wisdom of most economists is that China’s headline inflation is under control. Jim O’Neill, Chairman of Goldman Sachs’ Asset Management, argued this, and an analyst at Royal Bank of Canada agreed and wrote: “The fact that Wen is now predicting price pressures will ease despite these near-term risks suggests that he has received relatively firm assurances from his economic advisers that the situation is set to improve in coming months.”

O’Neill and RBC must be looking at a different China than the one in which I operate a business and face soaring salaries and rents. It is true China does not face 20 percent annual inflation like Vietnam; however, measures should not be loosened in July as many analysts predict will happen when China’s top leaders gather to discuss economic policy for the second half of the year. Even if official inflation is under control, food prices soared 11.7 percent in May as drought and Japan’s nuclear disaster have damaged the food supply chain.

Contrary to what O’Neill and RBC think, things will only get worse in the short-term as multinationals start to transfer higher costs to consumers and as new university graduates enter the labor force in July.

My firm has interviewed several dozen large multinationals in the past month. Fearful of incurring the wrath of the Chinese government as Unilever (Euronext Amsterdam: una-nl) did for announcing price hikes, many reported delaying raising prices but would strongly consider raising them in the next quarter. Instead, Coca-Cola (NYSE: ko) and Pepsi (NYSE: pep) shrunk bottle sizes from 600 ml to 500 ml. YUM Brands! (NYSE: yum) and Starbucks (NASDAQ: sbux) added more expensive items, but McDonald’s (NYSE: mcd) raised prices.

I asked my office landlord recently if rent would go up 10 percent when our contract ends at the end of this year. She laughed and told me 20-30 percent at least. Taxi prices will rise 20 percent in Shanghai and other cities soon. The Shanghai government has said taxi fares will be raised after the public discussion period in June. Fuel surcharges have also gone up in Shenzhen and Beijing.

Plus tax breaks implemented during the crisis are being rescinded. In other words, a perfect storm of rising wages, rents and commodities will force most companies to begin transferring prices to the end consumer. With brownouts set to hit 10 manufacturing oriented provinces this summer, pricing pressures will only continue.

In order to stave off potentially destabilizing inflation and a housing bubble, the government should leave tightening measures in place in the short-term. Until the U.S. dollar regains its strength or America ends its wars in the Middle East, causing commodity prices to drop, there is no way inflation is a short-term issue for China.

Measures to cool the economy are creating massive pent up demand in a number of sectors. For the past year and a half, transactions in the residential real estate market have essentially come to a stop. Aside from multi-million dollar mega mansions whose prices are soaring, sales volumes are down 70 percent in Shanghai and prices are remaining flat or even dropping as stringent measures and reduced access to credit freeze the market.

If restrictions are eased, another bull market in the real estate sector will appear, due to the many investors and younger couples who have been sitting on the sidelines. Proof of the pent up demand is that Chinese have been looking to invest abroad more. Vancouver’s real estate prices last year rose 14 percent because of the influx of mainland Chinese money, and according to Canada’s Frontier Centre for Public Policy is now the third most expensive English speaking city in the world after Hong Kong and Sydney (also favorite investment spots for mainland Chinese).

The world is now too economically interrelated to assume inflation in China won’t affect the world economy. Export prices to America are already increasing, and many companies like Nike (NYSE: nke) are shifting production away from China to cheaper markets like Indonesia. While the Chinese government is implementing the right measures and acting forcefully to stop inflation, there are no easy solutions.

Ben Bernanke’s loose monetary policies over the past several years have scared investors away from the U.S. dollar towards developing markets and commodities.

If left unaddressed, China’s current dangerous inflation levels coupled with investors’ increasing interest in the China market can only lead to higher prices for the world market in the short and long term.