Natural rubber imports set to increase on tyre demand

Natural rubber imports set to increase on tyre demand
July 15, 2011



Natural rubber imports by India, the fourth-biggest producer, may climb as much as 13% this year as rising car sales lift demand for the commodity used in tyres and gloves.

Purchases may climb to about 200,000 tonnes in the year that began on April 1 from 177,482 tonnes a year earlier, Rajiv Budhraja, director general of the Automotive Tyre Manufacturers Association, said. Imports in the three months through June rose 10% to 41,929 tonnes, the government-owned Rubber Board said in a statement on Friday. Purchases in June surged 60% to 19,118 tonnes.

Higher Indian purchases may extend a 44% rally in rubber prices in the past year in Tokyo and increase costs for Indian tyremakers including MRF and Apollo Tyres.

“International prices have declined and are now on par with domestic prices, leading to higher purchases from India,” Budhraja said. “Most tyre companies plan imports in the first half as it is the lean production season in India.”

December-delivery rubber gained as much as 1.2% to 380.6 yen a kg ($4,808 a tonnes) before settling at 378 yen at on the Tokyo Commodity Exchange. Futures have tumbled 29% since reaching a record 535.7 yen a kg reached on February 18.

Bridgestone and its Indian rivals including Apollo and MRF are investing $3 billion in plants to meet rising demand for tyres, according to the tyre manufacturers group. Car sales in the world’s second-most populous nation may more than double to 3 million by 2015, according to the government, boosting demand for rubber.

“Main demand for the tyre industry comes from the replacement market for trucks and buses. If the overall economic and the agricultural growth remain good, then the demand from this sector will receive a boost,” he said.

India’s car sales may grow 10% to 12% this financial year, the Society of Indian Automobile Manufacturers said on July 11. That’s less than the 16% to 18% it predicted earlier.

Imports will climb in July even after domestic natural rubber output gained 5.3% in the three months through June, Budhraja said. Production last month advanced 4.1% to 59,200 tonnes, according to the board.




Spot rubber rules steady
July 15, 2011



KOTTAYAM, JULY 15:
Spot rubber ended almost unchanged on Friday. The market lost its direction lacking fresh incentives either from the domestic or international front to catalyze the sentiments. ISNR-20, the only gainer of the day inched up on comparatively better demand. While supply concerns continued to lend support, increased domestic production, rise in imports and slowdown in car sales limited the gains. The transactions were low.

Sheet rubber was steady at Rs 214 a kg, according to traders. The grade improved marginally to Rs 214 (213.50) a kg both at Kottayam and Kochi, as reported by the Rubber Board.

In futures, the July series expired at Rs 213.65 (213.20) while the August series closed at Rs 215.60 (215.86), September at Rs 215.35 (215.98), October at Rs 215.60 (215), November at Rs 216.60 (216.75) and December at Rs 217.89 (218) a kg for RSS 4 on the National Multi Commodity Exchange.

RSS 3 weakened at its July futures to ¥372.9 (Rs 210.12) from ¥373.1 a kg during the day session but then recovered to ¥373.2 (Rs 210.29) in the night session on the Tokyo Commodity Exchange.

Spot rates were (Rs/kg): RSS-4: 214 (214); RSS-5: 211 (211); ungraded: 208 (208); ISNR 20: 211 (208) and latex 60 per cent: 137 (137).





Rubber production up 4% in June
July 15, 2011




KOCHI, JULY 15:
While the production of natural rubber rose by 4.1 per cent in June, consumption lagged behind at 0.6 per cent. Hence, the gap between production and consumption continued to widen at over 21,000 tonnes. Sources in the Rubber Board said that any crisis in the rubber markets is quite unlikely as there is a buffer stock of 2,47,442 tonnes.

They pointed out that rubber production has been consistently growing in the recent past, mainly on account of growth in the tapped area.

And this growth is likely to continue, as incremental areas that were brought under rubber cultivation in the last six to seven years will begin yielding in the years to come.

Driven by the prevailing higher prices, the tapping intensity is said to have increased last month. This also contributed to the growth in production. The extent of rain guarding is said to have remained stable and not had much of an impact on the growth curve.

Although the intermittent nature of the rains last month would have helped production, sources said that the climate was not very different in June last year either.

Production for the April-June quarter was up 5.4 per cent to 1,75,700 tonnes as against 1,66,750 tonnes last year.

Mr N Radhakrishnan, Advisor to the Cochin Rubber Merchants Association (CRMA), said that enquiries for rubber from upcountry buyers have been poor this week. He attributed this to increased imports.

The quoting price of good quality crump rubber in foreign markets was Rs 198 against Rs 214 for Indian sheet rubber, and several Indian buyers were in the process of importing their raw material. Bulk purchase and imports would always command a lower price, he pointed out.

IMPORTS

Malaysia, Indonesia and Thailand were the three countries from where crump rubber was being imported into India.

Of these, countries like Indonesia offer bargain prices since they consume only around 20 per cent of their total rubber production.

On the contrary, Malaysian rubber industries have been expanding rapidly and consume a significant portion of their own production, Mr Radhakrishnan said.

Imports increased by close to 60 per cent in June, compared with the same month last year.

This is expected to continue this month as well. The growth in imports for the April-June period is also evident as it has almost doubled to 38,233 tonnes from 19,118 tonnes last year.