Natural Rubber Prices to Stay above $4.50/Kg on Low Stocks

Natural Rubber Prices to Stay above $4.50/Kg on Low Stocks
August 3, 2011





Natural rubber prices will likely stay above $4.50 a kilogram in the third quarter, Yium Tavarolit, Chief Secretary of the International Rubber Consortium, said Tuesday, upgrading his June forecast of $4/kg.

Bangkok-based Yium said the global macroeconomic outlook will take a turn for the better asU.S. lawmakers have agreed to raise the country’s debt ceiling to avert a potential default.

Fundamentals are already supportive, he said. “Despite the strong yen, Tocom rubber is still supported by firm spot prices. The weather is also erratic in Thailand”, which may affect supply.

Thailand is facing rain in the major producing region in the south, while the north is experiencing floods. IRCo member countries Thailand, Indonesia and Malaysia account for about 70% of global natural rubber output.

Prices of regional tire grade rubber are all well above $4.50/kg.

Yium said global rubber inventories are running low, which will also fuel restocking.

A drop in inventory levels in China prompted buyers to purchase aggressively from the international market in the last month, traders said. China is the world’s largest consumer and importer of the commodity.

“China is bidding actively every day. They are hungry for rubber,” a trading executive for a major exporter in Thailand said.

Stock levels at bonded warehouses in Qingdao are around 80,000-90,000 metric tons–down some 40% from 150,000 tons in April, as tire makers in China draw down inventories, traders said.

“Tire makers haven’t stored a lot of rubber since the start of the year, and improving signs in the auto sector prompted them to restock in anticipation of rising demand in the coming weeks,” a Shanghai-based trader said.

The China Association of Automobile Manufacturers said in July that it expects China’s auto sales to grow 5% this year. China’s June tire production rose 5.4% from a year earlier to 73.2 million units, the National Bureau of Statistics said in July. Output rose 3.4% from May.

The rising pace of Chinese buying recently is also due to a slowdown in purchases earlier this year when natural rubber prices surged to record levels.

The benchmark contract on the bellwether Tokyo Commodity Exchange hit a historic high of Y535.7/kg in February. Tocom rubber has since fallen about 27% to around Y390/kg.

The Association of Natural Rubber Producing Countries said in its latest monthly report in July that China will import 2.8 million tons of natural rubber this year, up 0.6% from last year.





Asian Rubber Ends Down; Support Level Likely At $4.50/Kg
Written by HMH | August 3, 2011 | 0 |





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.





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.