Asian Rubber Ends Down; Support Level Likely At $4.50/Kg

Asian Rubber Ends Down; Support Level Likely At $4.50/Kg
August 3, 2011





Asian rubber settled lower Tuesday, with softer crude-oil prices and Chinese rate hike fears dragging prices down.

A Xinhua news agnecy analysis suggested that China will likely announce a rate hike around Aug. 10.

Benchmark January natural rubber futures on the Tokyo Commodity Exchange settled Y2.5 lower at Y387.2 a kilogram, with a strong yen still weighing on prices.

However, firm spot prices due to strong fundamentals are supporting Tocom rubber, International Rubber Consortium Chief Secretary Yium Tavarolit said.

A Singapore-based dealer said Tocom is locked in directionless trade and prices will likely remain rangebound until strong leads emerge.

January Tocom rubber extended losses to close Y2.2 lower at Y385/kg in the night session, which is considered part of the next trading day.

Natural rubber on the Shanghai Futures Exchange settled 1.1% lower, taking cues from SHFE metals amid caution over the outcome of a pact to raise the U.S. borrowing limit.

Physical rubber prices were mostly lower but trade was cautious, the Singapore-based dealer said.

”Tocom has been directionless and pretty rangebound recently. People are risk averse due to all the bad news [on the macroeconomic front], so they are all on the sidelines, especially as prices are still on the high side.”

IRCo’s Yium is optimistic on natural rubber prices as he upgraded his forecast for prices to stay above $4.50/kg in the third quarter. His previous forecast was $4/kg.

He said the global macroeconomic outlook will take a turn for the better as U.S. lawmakers have agreed to raise the country’s debt ceiling to avert a potential default.






India: Rubber imports to hit record 2 lakh tonne
August 2, 2011





Mumbai: India, the world’s second-biggest rubber consumer, is likely to import a record 2,00,000 tonnes of natural rubber in the year ending March 31, 2012 as tyre makers cash in on lower customs duties, the head of a trade body said on Tuesday.

“Considering the lower imports duty and price parity, I think imports of at least 200,000 tonne would be there,” George Valy, president of the Indian Rubber Dealers’ Federation, told Reuters in an interview.

The country had already imported a record 1,77,637 tonne of natural rubber in the financial year which ended in March 2011.

Valy said in 2011-12 consumption is likely to rise by 5.4% to one million tonne and production would be 9,00,000 tonne, up 4.4% on the year.

The federal government has allowed imports with a duty of 20% or R20 a kg, whichever is lower, for the current financial year, effectively cutting the import duty.

Tyre makers this year were importing rubber and paying duty of R20 per kg. They would have been paying duty of over R43 per kg at current prices had the duty been 20%.

The country, the world’s fourth-biggest producer, will need more imports than the implied shortfall of 1,00,000 tonne for 2011-12 as farmers are not selling all their production.

They are holding some stocks in the hope of higher prices in future, Valy said, after prices more than doubled in the last two years.

Farmers are holding a huge amount of stocks. This has never happened before. The holding tendency is unlikely to allow domestic prices to correct sharply. As soon as prices go down, farmers cut supplies, he said.

Imports in the first quarter of the current financial year rose 9.7% on a year ago to 41,929 tonne.

India imports natural rubber from Thailand — the world’s biggest producer — Indonesia, Malaysia and Vietnam. The world’s largest importer is China, which is also the top consumer with an intake of 3.5 million tonne.

There were concerns that India’s natural rubber consumption growth could slow in 2011-12 as auto sales are falling, hitting tyre demand from original equipment manufacturers (OEMs).

But Valy said there was demand from the tyre replacement segment which will drive growth.

He added that domestic prices this year were likely to remain near international levels because of the change in duties, after farmers charged premiums of up to R35 per kg last year on international prices, given high import duties.

“Imports are rising. Carry-forwards stocks are ample. So I don’t think the difference between domestic and international prices will rise like last year. Local prices will remain near international prices,” Valy said.

At the end of June, stocks stood at 2,47,442 tonne compared with 1,80,697 tonne a year ago, data with the state-run Rubber Board showed.

“The country’s 2011-12 natural rubber production will rise due to good monsoon rainfall in the southern state of Kerala, the country’s biggest producer,” Valy said.






Tokyo futures fall on weak oil, stocks (Aug 3)
August 3, 2011





TOKYO, Aug 3 (Reuters) – Key Tokyo rubber futures fell on Wednesday as sentiment was hurt by weakness in oil and stock markets on concerns over the U.S. economy and a strong yen hitting Japanese exporters including automakers.

FUNDAMENTALS

* The key Tokyo Commodity Exchange rubber contract for January delivery <0#2JRU:> fell 4.3 yen or 1 percent to 382.9 yen per kg as of 0020 GMT.

* The most active Shanghai rubber contract for January delivery delivery fell 1.3 percent to close at 35,725 yuan per tonne on Tuesday. Volume stood at 447,532 lots.

* Oil prices extended their declines in early Asia on Wednesday after falling the day before when U.S. economic data fuelled concern about the economy even as Congress passed a U.S. debt-cutting measure in time to avoid a default for the world’s top oil consumer.

* The Swiss franc held hefty gains in Asia on Wednesday, having rocketed to record highs as investors scrambled for a safe haven on renewed tensions in the euro zone debt market and worries about a global slowdown.

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

MARKET NEWS

* The United States stepped back from the brink of default on Tuesday but congressional approval of a last-gasp deficit-cutting plan failed to dispel fears of a credit downgrade and future tax and spending feuds.

* U.S. consumer spending fell in June for the first time in nearly two years and incomes barely rose, signs the economy lacked momentum as the second quarter drew to a close.

* U.S. auto sales ticked higher in July, but the industry cautioned that prospects for a second-half recovery remained clouded with consumers hurting in a weak economy.

* Toyota Motor Corp is looking to boost global production by 24 percent to a record 8.90 million vehicles in 2012 as it rushes to make up for output lost in the months after the March earthquake, a source with knowledge of the plan said.

* Toyota slumped to its first quarterly loss in two years after the March 11 disaster virtually halted production, and the Japanese auto giant warned the stronger yen was hobbling it in the battle against South Korean rivals.

* The Nikkei average fell for a second day on Wednesday, hit by concerns about the weakening U.S. economy, while the heightened chance of Japanese authorities intervening in currency markets to curb the yen may lend support.

* The S&P 500 turned negative for the year on Tuesday as the wrangling over the U.S. debt ceiling faded and investors turned their attention to the stalling economy.








FMC charges NMCE chief of fraud


MUMBAI, AUG 2:
The commodity market regulator Forward Market Commission has charged Mr Kailash Gupta, the founder and Vice-Chairman of National Multi Commodity Exchange (NMCE), for mismanagement and favouring his family members by abusing his position in the exchange.

“Based on the detailed scrutiny and analysis of the various documents gathered and statements recorded in the course of the enquiry, it is established that Kailash Gupta, the then MD has in complete breach of his fiduciary responsibility to the exchange, systematically defrauded it, misused and misappropriated its property and committed a series of crimes under various laws including FCRA (Forward Contract Regulation Act), IPC (Indian Penal Code), FEMA (Foreign Exchange Management Act) for benefiting himself, his family and his family owned and/or family controlled firms, namely, Arrow Total Solutions Pvt Ltd, Arrow Total Solutions LLC, Neptune Overseas and Kushal Enterprises,” said the 96-page order passed by Mr B.C. Khatua, Chairman, FMC, Mr Ramesh Abhishek, Member, FMC and Mr D.S. Kolamkar, Member FMC.

Therefore, they are all severally and jointly liable not only to return the embezzled, misappropriated and misused funds of the NMCE but also liable to be prosecuted for the offences committed, it said.

Mr Kailash Gupta, Vice-Chairman, NMCE said, the FMC has clearly mentioned that its order is subject to the outcome of High Court judgement in an application filed against FMC and six others in this matter.

“I would not like to comment any further on the issue as it is sub judies,” he added.

FMC has directed the National Multi-Commodity Exchange (NMCE) to immediately file criminal case against Mr Gupta who has all along been in effective control of ATSPL for perpetrating a fraud on NMCE and claiming payments for non-existent software development and software services, thereby causing it a wrongful loss of at least Rs 28.80 crore. The four transferee benami shareholders of ATSPL may be made the co-accused, the order said.

The NMCE was directed to place before the Board the evidence regarding the irregularities in the allotment of NMCE shares to NOL and impugned 2,932,280 shares presently held by NOL.

The exchange has been directed to immediately file an FIR, if not already filed, against Ms. Poonam Gupta nee Verma, her husband Mr Kaushik Gaurav Verma, the then Exchange employee Mr Suneil Jain for making systematic attempt to sabotage the IT and software systems of the exchange.







Rubber prices down on buyer resistance


KOTTAYAM, AUG 2:
Physical rubber prices turned weak on Tuesday. The market edged lower mainly on buyer resistance. There was no renewed selling pressure in the market though the reports on increasing production and imports pointed to further decline in prices. Meanwhile car sales of major companies recorded a sharp drop in the month of July following the hike in interest rates and escalating fuel costs raising further concerns over the demand. Sheet rubber moved down to Rs 207 from Rs 208 and 207.50 respectively according to traders and the Rubber Board. The trend was partially mixed.

In futures, the August series improved to Rs 207.65 (206.62), September to Rs 207.09 (206.08), October to Rs 207 (206.03), November to Rs 208 (207.26) and December to Rs 209.99 (208.55) while the January series slipped to Rs 211.50 (212.90) a kg on National Multi Commodity Exchange (NMCE). RSS 3 (spot) slipped to Rs 216.03 (216.47) a kg at Bangkok. The August futures weakened to ¥ 379.01 (Rs 217.05) from ¥ 382.0 per kg during the day session and then to ¥ 377.1 (Rs 215.93) in the night session on Tokyo Commodity Exchange (TOCOM).

The spot rubber rates in Rs per kg were: RSS-4: 207.00 (208.00), RSS-5: 204.00 (205.00), Ungraded: 198.00 (197. 50), ISNR 20: 206.00 (206.00), and Latex 60 per cent: 133.50 (135.00)