OUTLOOK-India rubber seen down on weak demand, ample supply

OUTLOOK-India rubber seen down on weak demand, ample supply
June 19, 2012




Reuters – Natural rubber prices in India, the world’s fourth-biggest producer, are likely to ease this week tracking losses in the world market and as local tyre makers trimmed purchases amid rising supplies.

The benchmark July rubber on India’s National Multi-Commodity Exchange (NMCE) provisionally closed down 0.6 percent at 18,720 rupees per 100 kg on Tuesday.

The spot price of the most traded RSS-4 rubber (ribbed, smoked sheet) in the Kochi market in southern Kerala state fell by 100 rupees to 18,700 rupees per 100 kg.

“Tyre makers are not making bulk buying. They know supplies are adequate. So they are making small purchases,” said Tom George, a vice president at Indian Rubber Dealers Federation.

Besides, continued flow of imported rubber, especially of Standard Malaysian Rubber (SMR) 20, allowed tyre makers to cut dependence on local supplies, George said.

The spot price of SMR 20 grade rubber was 16,360 rupees in Kuala Lumpur, Malaysia, data with the Indian Rubber Board showed.

India’s natural rubber imports in May rose to 18,419 tonnes from 16,293 tonnes a year ago, state-run Rubber Board said earlier this month.

India imports natural rubber from Thailand, Indonesia, Malaysia and Vietnam.

Supplies in India were rising and are expected to improve further after top rubber producing Kerala state received rains in the past three weeks, dealers said.

Tokyo rubber futures ended lower on Tuesday, retreating from a two-week high on Monday on renewed concerns about the demand impact from economic problems in the euro zone, dealers said.

Natural rubber prices will remain under pressure globally due to falling crude oil prices, which makes synthetic rubber cheaper than natural rubber, dealers said.

Brent crude fell to a near-17-month low below $95 a barrel on Tuesday, hit by the latest twist in the euro zone crisis.

Dealers expect rubber consumption from tyre makers to drop in coming months on lower demand from auto makers, who posted lacklustre sales in May.