Rubber market on July 21: Spot rubber declines further on buyer resistance

Rubber market on July 21: Spot rubber declines further on buyer resistance
July 21, 2011





KOTTAYAM, JULY 21:
Domestic rubber prices remained under pressure on Thursday. In the spot, prices weakened further on buyer resistance. Declines in the Japanese futures and another weak closing on the National Multi Commodity Exchange weighed on the market, as most of the traders stayed back letting the prices to seek further lows. The news on imports continued to cast its shadow over the sentiments. Among other reports, the key TOCOM rubber futures surrendered on profit taking ahead of the emergency European Summit in Brussels after hitting a six week high on Wednesday.

Sheet rubber dropped to Rs 213 (214) a kg, according to traders. The grade moved down to Rs 213.50 (214.50) a kg both at Kottayam and Kochi, as quoted by the Rubber Board.

The August series weakened to Rs 208.50 (213.01), September to Rs 208.41 (211.92), October to Rs 209.50 (212.30), November to Rs 210.55 (214), December to Rs 211 (214) and January to Rs 210.50 (216.71) a kg for RSS 4 on the NMCE.

The July futures declined to ¥377.6 (Rs 213.08) from ¥381.9 a kg during the day session and then to ¥377.2 (Rs 212.85) in the night session on the Tokyo Commodity Exchange. RSS 3 (spot) slipped to Rs 216.14 (216.30) a kg at Bangkok.

Spot rates were (Rs/kg): RSS-4: 213 (214); RSS-5: 210 (211); ungraded: 206 (208); ISNR 20: 210 (211) and latex 60 per cent: 139 (139).






Rubber prices not expected to fall despite imports at lower duty
July 20, 2011





KOCHI, JULY 20:
The announcement that 40,000 tonnes of natural rubber can be imported at the concessional duty of 7.5 per cent has created a flutter in the market and apprehension in the minds of rubber farmers. What has created greater consternation in the minds of the farming community has been the speed with which the announcement was made.

The announcement came in the backdrop of a short spell of just two weeks when global rubber prices edged lower than domestic prices.

However, Mr R Sanjith, Head of Commodity, United Planters Association of Southern India (UPASI), said that for six months domestic prices were consistently lower than international prices. Between January and mid-July, the average global rubber rice ruled at Rs 244 a kg, Rs 20 higher than the domestic price of Rs 224.

RUBBER BOARD ESTIMATE

The Rubber Board has estimated that domestic rubber production will increase by 4.8 per cent in 2011-12 to 9.02 lakh tonnes while consumption is poised to grow by 3 per cent to 9.77 lakh tonnes. Going by the early trends for the first three months of the current fiscal, the targets are realistic, sources in the Board said.

The potential demand-supply shortfall of 75,000 tonnes can easily be met from the stocks available in the country, they said. The stock available at the end of June was 2.47 lakh tonnes, enough to last over three months. While the industry has been consistently questioning existence of the stock, sources in the trade stated that the difference if any would not be so huge as to create a shortfall in 2011-12.

Given the dynamics of the markets and the global demand-supply position, Indian prices are not expected to fall much.

Rubber Board sources said the first consignment of imports undertaken after the announcement was made, would hit the domestic market only 2-3 months down the line. There is regime of regulatory procedures which have to be complied including regulatory approvals from the Directorate-General of Foreign Trade.

Mr George Valy, President of the Indian Rubber Dealers Federation, said that of the 40,000 tonnes of natural which were permitted to be imported last year, just around 10 per cent would have been imported. Neither did the announcement, nor the actual imports threaten the price line then, he said.

SHORT-TERM BLIP

However, he did not rule out the possibility of a short-term blip in prices in the wake of the latest announcement. But even this trend has not been testified to by the developments of the last couple of days when rubber prices did not evince much erosion.

The price spurt in July was mainly due to low arrivals in the markets on account of incessant rains. This was also the season of high imports. But all that is poised to change from August when domestic production in poised for their annual cyclical upsurge. But the increased arrivals from next month are also not expected to depress prices to any degree since it is going to be dictated by global price trends.

In the worst case scenario, India can always resort to the export market if and when the domestic prices fall Rs 10 below the international prices, Mr Valy said.






Rubber import furore over residual quota, says ATMA
July 20, 2011




Thiruvananthapuram: Nothwithstanding the growing unrest among the political opposition and protesting against the Centre’s decision to import natural rubber, the Automative Tyre Manufacturers Association (ATMA) has stated that the fuss was over import of the “residual quota” and not fresh imports.

There was a hue and cry in Kerala over reports in a section of the press that clearance has been given to import 40,000 tonne with 7.5% as import duty.

“The permission to import 40,000 tonne of natural rubber at 7.5% represents an extension of the earlier deadline of March 2011,” Rajiv Budhraja, director-general, ATMA told FE. “This permission was granted at the fag end of fiscal 2010-2011. Since then the industry was unable to import the entire quota of permitted volumes. Government has now permitted import of the residual quota in the current year,” he said.

In fact, industry had pleaded for import of natural rubber to the extent of domestic production deficit, which ATMA estimates to be to the tune of 2 lakh tonnes in the current fiscal. Commerce ministry has suggested for duty free import of 1 lakh tonne, but this was not favoured by finance ministry.ATMA argues that “mere extension of the deadline for import of residual 40,000 tonne of natural rubber is hardly substantive and just procedural.” Industry, according to Budhraja, is suffering due to widening gap between the domestic production and consumption.

The reports of rubber import, meanwhile, has kicked up a furore in Kerala, which is home to 12 lakh rubber farmers. Within 12 hours of the media report, the price of natural rubber fell from R216 per kg to R211 per kg.

CPM member Suresh Kurup argued that it was the tyre lobby that wanted to bring down the domestic price that created market sensation.