Rubber may slide on low China demand

Rubber may slide on low China demand
January 11, 2012





Rubber prices, little changed, may decline amid concern that demand from China, the world’s largest consumer, may be slowing after stockpiles increased to a 10- month high.

June-delivery rubber dropped by as much as 0.5% to 266.60 (110 baht) per kilogramme or US$3,471 a tonne before trading at 268 on the Tokyo Commodity Exchange late yesterday morning.

Natural-rubber inventories monitored by the Shanghai Futures Exchange rose by 900 tonnes to 33,874 tonnes, the highest level since March, the bourse said last Friday.

Rising supply will turn the global market into a 413,000-tonne surplus this year from an 87,000-tonne shortage last year, said the Goldman Sachs Group.

Demand from China is not strong enough to push up rubber prices, said Takaki Shigemoto, an analyst at research company JSC Corporation in Tokyo. There is no tightness in supply as a slowdown in the global recovery curbs consumption.

The market was also capped as oil traded near the lowest price in more than a week in New York, weakening the appeal of natural rubber as an alternative to synthetic products made from petroleum, said Mr Shigemoto.

Oil extended losses for a third day yesterday as signs of weakening growth in Europe indicate fuel demand may falter. The situation regarding Iran is bearish for the price of crude, said Jeffrey Currie, head of commodities research at Goldman Sachs.

May-delivery rubber on the Shanghai Futures Exchange lost 0.6% to 24,455 yuan (123,000 baht) per tonne. The Thai cash price rose to 105.75 baht/kg yesterday from 105.25 baht last Friday, said the Rubber Research Institute of Thailand.

Its statistics show rubber prices were bullish last year except in the fourth quarter due largely to concern over the crisis in Europe and abundant supplies in China.

Export prices of RSS3 products dropped to 119-121 baht/kg in October and November, far lower than the average of 150 baht in the first three quarters.

In the first nine months, strong demand from auto industries in China, the US and Japan pushed up rubber prices and resulted in a historic high of Thailand’s RSS3 products, which sold at an average of 180.53 baht last February, with 155 baht/kg for latex.

But the Thai Rubber Trade Association (TRA) said the situation is quite different this year, as the product depends largely on the economy.

It expects a stagnant rubber trade this year amid the global economic woes.

The TRA reported rubber prices have been continually volatile since last October and are inclined to decrease further due to the crisis that has also made a great impact on stock markets and oil prices and eventually affected rubber prices.

The delay in shipments of big Chinese buyers is one negative factor that had a considerable psychological impact on market price.

But the TRA is positive high rainfall in the South resulting in a lower supply entering the market will push up prices. It also said moves by International Rubber Consortium Ltd, a venture formed by Thailand, Indonesia and Malaysia, aimed at tackling falling rubber prices will be another positive factor.







Rubber growers issue ultimatum
January 11, 2012





Rubber growers have given the government five days to make clear its policy to address declining rubber prices, or they will protest in front of the prime minister’s house.

“If the government remains unclear about how it will handle prices of rubber by Jan 15, a group of rubber growers will stage a protest in front of the prime minister’s house,” Para Rubber Council of Thailand honorary chairman Uthai Sonlaksup said on Tuesday.

Mr Uthai said rubber growers had been seeking government assistance for three months, but the government had yet to come up with any concrete measures.

The drop in prices was attributed to the export of 180,000 tonnes of para rubber to China at only 105 baht a kilogramme, he said.

The current price of smoked rubber stood at 93 baht per kilogramme and latex at 80 baht per kilogramme, he said.

“There are also people in the cabinet who don’t have any knowledge about the rubber business but gain benefits from ubber sales,” Mr Uthai said.

He said the association had sent two letters to the government, but no progress was made.

Rubber growers wanted the retail price of rubber set at 120 baht a kilogramme, he added.






Rubber prices could rise from Feb on lower supply
January 11, 2012





CHENNAI, JAN. 10:

The sentiment in the natural rubber market could improve from February on lower supply but the gain could be limited by sluggish demand and lack of support from speculators, according to the Association of Natural Rubber Producing Countries (ANPRC).

The association’s Natural Rubber Trends & Statistics for December said that the current state of the global economy and an unfavourable demand outlook are likely to keep speculative investors away from the commodities market. It would result in the rubber market not receiving any speculator support to perk up the price.

The ANPRC’s senior economist, Mr Jom Jacob, said that the gravity of the current global economic situation, particularly the situation in many advanced economies, points to the fact that putting the economy back to the recovery path may take a much longer time than what was anticipated a year ago. “To be more specific, there is little possibility for the global economy to return to a recovery path by first quarter of 2012. Under such an unfavourable global economic condition, rubber demand is likely to stay sluggish during the first quarter of 2012,” he said.

HUGE STOCKS

With China holding huge inventories, the possibility is remote for Chinese buyers to go for large volume purchases before the country enters a week-long lunar new-year holidays starting next week.

In India, rubber demand dropped 1.2 per cent against a 4.3 per cent growth in 2010.

Growth in truck and bus tyres, that consumer most of the rubber produced in the country, registered 0.01 per cent growth while passenger car tyres demand was up three per cent. In October, truck and bus tyre production dropped 13 per cent, while passenger car tyres output slipped 18 per cent, the association pointed out.

‘Wintering’ or the leaf-falling lower supply season will begin during February-March with slight variation across countries. In Thailand, the top producer, wintering is scheduled to begin in March and therefore, supplies are likely to be normal in January and February. In Malaysia, wintering begins in mid-February and in India, it will later this month. This could lead to some positive sentiment since production could drop from 9.45 lakh tonnes in January to 7.67 lakh tonnes in February.

WEAK DEMAND

“Weak demand will continue to keep the market dormant,” the association said.

On supply dynamics, it said production this year could increase to 10.42 million tonnes from 10.1 million tonnes last year, a growth of 3.1 per cent. But it will lower than the 6.4 per cent growth seen last year.

Indian production is expected to rise four per cent to 9.30 lakh tonnes against 8.94 lakh tonnes last year. Production growth last year was, however, higher at 5.1 per cent.

Exports by ANRPC members are expected to grow 2.3 per cent at 7.83 million tonnes against 7.66 million tonnes (2.4 per cent growth) last year. Exports from India are projected to drop nearly 10 per cent to 40 lakh tonnes against 44 lakh tonnes shipped out last year when shipments doubled.

Rubber imports in the country could drop to 75,000 tonnes from 1.45 lakh tonnes last year. In 2009, imports totalled 1.97 lakh tonnes.

Closing stocks as of December 31 were 3.55 lakh tonnes against 3.34 lakh tonnes at the start of the year. The stocks will meet production requirements for nearly five months.

The ANRPC said that 24,000 hectares could be brought under rubber cultivation this year against 25,000 hectares last year. Replanting, on the other hand, is likely to be done on 15,000 hectares against 10,000 hectares.






Natural rubber output up 1 pc in Dec; consumption up by 4.4 pc
January 11, 2012





New Delhi, Jan 10 (PTI) Natural rubber production rose by nearly one per cent during December at 1.04 lakh tonnes, while consumption increased by over four per cent in the last month at 84,000 tonnes.

During December 2010, the natural rubber production stood at 1.03 lakh tonnes and consumption at 80,465 tonnes.

Imports of natural rubber increased to 21,734 tonnes in December 2011 from 13,805 tonnes in the year-ago period, the Rubber Board said today. However, exports declined to 922 tonnes from 2,495 tonnes during the period under review.

In the first nine months of this fiscal, NR production rose by 4.3 per cent at 6.79 lakh tonnes against 6.51 lakh tonnes in the year-ago period.

The consumption grew marginally to 7.17 lakh tonnes during April-December 2011 from 7.08 lakh tonnes in the corresponding period of last fiscal.

Imports of natural rubber fell by nearly 20 per cent at 1.33 lakh tonnes during the first nine months of this fiscal, while exports jumped three-fold to 22,472 tonnes during April- December 2011 compared with the year-ago period.