Tokyo futures fall on worries over global economy (Sept 6)

Tokyo futures fall on worries over global economy (Sept 6)
September 6, 2011





TOKYO, Sept 6 (Reuters) – Key Tokyo rubber futures fell on Tuesday as ongoing financial trouble in Europe and recent weak U.S. data raised concerns about a deteriorating global economy.

FUNDAMENTALS

* The benchmark rubber contract on the Tokyo Commodity Exchange <0#JRU:> for February fell 1.9 yen or 0.5 percent to 359 yen per kg as of 0031 GMT.

* The contract fell as low as 360.0 yen on Monday, the lowest since Aug. 26.

* The most active Shanghai rubber contract for January delivery fell 955 yuan to finish at 32,795 yuan ($5,138) per tonne on Monday. Volume picked up at 600,012 lots from Friday’s 457,812 lots.

* The euro wallowed at one-month lows against the dollar in Asia on Tuesday, while commodity currencies nursed heavy losses as concerns about the health of the global economy prompted investors to dump riskier assets.

* U.S. crude futures declined in early Asian trade on Monday after a U.S. jobs report raised recession worries, outweighing supply concerns over a major shutdown of offshore oil production as Tropical Storm Lee reached the coast of Louisiana on Sunday.

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MARKET NEWS

* Carmakers in Brazil are throttling back production due to high inventories and signs of cooling demand in Latin America’s largest economy after a red-hot first half of the year.

* The European Union is working on adopting a convincing, longer-term approach to tackling problems relating to national budgets and euro-zone governance, European Commission President Jose Manuel Barroso said on Tuesday.

* China could enter the sugar market to replenish stocks this week, discounts for Vietnamese robusta beans may widen further on ample supply, while rain in top rubber producer Thailand will offer support to Tokyo futures, which set the tone for physical prices.

* The United States was entitled to impose extra safeguard duties on imports of Chinese tyres, the World Trade Organization’s top court said on Monday, upholding a ruling made in December 2010.

* Japan’s Nikkei stock average opened down more than 1 percent on Tuesday, as U.S. stock futures fell in line with a sell-off in Europe on concerns about banks and global recession fears.





New York crude below $85 in Asia
September 6, 2011





AFP – New York crude prices plunged below $85 in Asian trade Tuesday as eurozone debt worries and weak Chinese service sector growth reignited recession fears, analysts said.

New York’s main contract, light sweet crude for delivery in October, dived $2.53 to $83.92 per barrel.

Brent North Sea crude edged up 49 cents to $110.57.

Crude markets were hit after the European Central Bank (ECB) called for the enactment of a second debt rescue for Greece, said Ker Chung Yang, a Singapore-based commodity analyst at Phillip Futures.

“The eurozone debt crisis is a hot topic for 2011, and is one of the factors that will lower the demand for growth,” he told AFP.

“In the commodities market, even the equities market, there are fears of another recession,” Ker added.

ECB head Jean-Claude Trichet warned Monday of an immediate and imperative need for enactment of a second debt rescue for Greece, and for tightened discipline in the management of eurozone economies.

He also spoke of an eventual “confederal” disciplined management of eurozone national finances.

The head of the International Monetary Fund Christine Lagarde repeated her warning that banks in Europe need extra capital to withstand any contagion from the eurozone debt crisis.

In Asia, indications that China’s service sector growth was stuttering also impacted crude prices, Ker said.

“China’s service sector’s growth in August is at the lowest pace in record, as shown by a HSBC PMI (Purchasing Managers’ Index) data,” he added.

Data released by HSBC on Monday showed China’s PMI in August dropping to 50.6 from 53.6 in July.

The figures indicate a slowdown in the world’s largest energy consumer, which has dire ramifications for crude as well as the global economy.





China’s rubber industry stabilised in July
September 6, 2011





Beijing — China’s rubber industry stabilised in the month of July, after a downward trend in the early part of the year, according to the monthly economic report on the industry from the China Rubber Industry Association (CRIA)

CRIA said export growth has remained high, but profitability has been affected by increasing prices of synthetic rubber.

The Association tracks 402 companies in the rubber sectorin China and their combined output in the first seven months was 169.734 billion yuan. Total sales revenue was up by nearly 20 percent on last year, while exports were up by 34 percent on the same period in 2010. Profits, however, were lower.

In the tyre segment, sales were also up by around 20 percent, though volume increases were much lower at between 2 percent and three percent depending on segment. Export values were up by over 30 percent.




Indian tyre makers saw healthy profit growth in quarter – ICRA
September 6, 2011





New Delhi — The Indian tyre industry reported a healthy revenue growth of over 25 percent during fiscal 2010-11, according to a quarterly report by Indian finacial analysts, ICRA. On the downside, said the analysts, a surge in input costs especially that of natural rubber (NR) negated any scale benefits, and resulted in a contraction of industry-wide operating margins by over 500 basis points.

ICRA said, “For fiscal 2011-12, while ICRA expects moderation in automotive OEM tyre demand, the strong growth in OEM sales in the last two fiscals is expected to translate into higher replacement demand. Growth in M&HCV replacement demand however could be affected by a slower economic growth. Besides grappling with high input costs and weak demand, domestic players are expected to face additional pressure with the lifting of anti dumping duty (ADD) (with effect from August 2011) on Truck and Bus radials (TBRs) imported from China and Thailand. “

It continued, “The PV segment is the second largest contributor of revenues for the tyre industry, after the M&HCV segment, accounting for around 15 percent of the total revenues. Domestic demand for passenger vehicles has also muted to around 4.0 percent during the first four months of the current fiscal (April-July 2012) after reporting strong growth upwards of 25 percent during the last two fiscals. ICRA expects sapping consumer sentiments owing to high inflation and spiralling interest rates to cap demand over the next quarter also. However, with a number of new product launches lined up for the festive season, demand is likely to improve marginally from Q3, 2011-12. “






Tokyo futures at 2-week low on economy concerns (Sept 6)
September 6, 2011





BANGKOK, Sept 6 (Reuters) – Tokyo rubber futures slumped to a two-week low on Tuesday, weighed down by persistent fears of a weaker global economy but given some support from firm oil prices, dealers said.

The benchmark rubber contract on the Tokyo Commodity Exchange <0#JRU:> for February delivery fell 4.6 yen to settle at 356.3 yen ($4.6) per kg. It fell more than one percent to 355.9 yen, the lowest since Aug. 23.

The most active Shanghai rubber contract for January delivery was up 115 yuan to finish at 32,910 yuan ($5,153) per tonne.

“An unfinished problem in Europe still weighed on TOCOM prices as it ignited fears of falling demand,” one dealer said.

The European Union is still working on adopting a convincing, longer-term approach to tackling problems relating to national budgets and euro-zone governance, European Commission President Jose Manuel Barroso said on Tuesday.

Dealers said they expected TOCOM prices to move in a narrow range of 350-360 yen per kg this week as concerns on weak economy could still weigh.

However, demand on the physical market and firmness in oil prices should lend some support.

Brent crude was steady at above $110 a barrel on Tuesday, as the market weighed expectations for further economic stimulus in the U.S. against a worsening euro zone debt crisis.