Rubber industry waves off 2010 with high prices

Rubber industry waves off 2010 with high prices

The rubber industry bowed to 2010 with rising prices, increasing demand and low production.
The year, which has been a good year for traders with rubber being auctioned at high prices, closed with a record price for RSS Grade 1 rubber of Rs. 540 – the highest ever to be reached in this grade in the history of Sri Lankan rubber.
Colombo Rubber Traders’ Association (CRTA) Chairman M.S. Rahim said that the market had been strong in 2010 due to low production and high demand. However, the situation is not exclusive to Sri Lanka alone, but to the world as a whole, since world rubber prices also increased rapidly through the year.
Bad weather in the Asian region is the main reason for this, with production of major rubber trading countries such as Thailand, Indonesia, India and Sri Lanka being weathered down due to heavy rains, which continued at intervals throughout the year.
Demand for rubber is the highest in China and India, Rahim said, with the rise in the automobile industry in these countries. “The automobile industry is growing rapidly in these countries. More people are rich and want more cars.
The demand for tyres is therefore high, due to which the demand for rubber has skyrocketed,” Rahim said.
Coupled with enormous demand was a drop in production in the second quarter of the year in June and July, he said. Prices have gone through the roof and not looked back from about September onwards.
However, Rahim said that there was a small dip in prices in September, with the clear weather that was experienced. “Due to the world shortage of rubber and over consumption, prices have been artificially increasing in 2010,” he noted.
In the coming year, Sri Lanka should increase production to meet the demand that has been created following months of bad weather and low plucking due to continuous holidays. “In 2010 production has been low compared to 2009,” Rahim said.
Quoting statistics available from the rubber auction, Rahim stated that in 2010, a total of 10.8 million kg of crepe rubber had been sold along with 4.03 million kg of scrap rubber and 2.9 million kg of skim rubber.
“Overall those in the rubber sector experienced a good year. Share prices of rubber holding companies and plantations have also increased greatly during the year. Prices of rubber have increased in large leaps with crepe rubber, a prime good for Sri Lanka, starting the year off with a Rs. 300 and ending with Rs. 575 at the last auction. Results in Q1 2011 will be similar, unless rainy weather continues, in which case production will plunge further, starting the year on a negative note,” Rahim said.
Talking about the last auction for 2010, Rahim stated that 149,125 kg of crepe rubber was auctioned along with 36,750 kg of scrap rubber, 10,500 kg of skim rubber (low grade) and 19,953 kg of RSS rubber.
RSS grade 1 – the best quality rubber in the RSS category – fetched Rs. 540, a record in Sri Lankan rubber auctions for the said grade. It broke the previous record of Rs. 525, which was marked in the previous auction.
Rahim stated all Sri Lankan rubber was auctioning at over Rs. 500 as at now except for scrap rubber, which goes at an average of Rs. 488. Scrap rubber is made out of left-out residue after tapping, which has been exposed to the elements. Tennis balls, shoe soles and hose pipes are made out of this kind of rubber.


Rubber likely to trade range-bound moving into the New Year

KUALA LUMPUR: Malaysian rubber is likely to trade range-bound moving into the New Year with external leads taking charge of the market, dealers said.
“It is hard to determine the movement of the market next (this) week but I am sure it will take its leads from the rubber futures' price trend in the Tokyo Commodity Exchange (Tocom),” a dealer said.
He added, there were some slight correction lately since Tuesday but prices would hover around the current prices moving forward.
“With wet weather conditions disrupting rubber tapping, the current supply contraints may last until next February,” he said.
He further said prices would be supported by concerns over tight supplies and also the uptrend seen in crude oil prices.
During the week, rubber prices were on a downtrend since Tuesday due to some technical correction to move in line with regional prices.
On a Friday-to-Thursday basis, the Malaysian Rubber Board's official sellers' physical price for tyre-grade SMR 20 ended 5.0 sen lower at 1,497.0 sen per kg while latex-in-bulk shed 4.5 sen to 986.0 sen per kg from 990.5 sen per kg.
However, SMR 20 ended the year with a gain of 35.9% or 538.5 sen from the 958.5 sen registered on Dec 31, 2009, while latex-in-bulk rose 38.1% or 376.5 sen per kg from 609.5 sen per kg recorded previously.
Meanwhile, the unofficial sellers' price for SMR 20 was at 1,501.0 sen per kg and latex-in-bulk stood at 985.5 sen per kg, the unofficial closing price for the previous week was not available due to early closure for Christmas eve.
The rubber martket was closed on Friday following Prime Minister Datuk Seri Najib Tun Razak's announcement, declaring it as a public holiday after Malaysia's maiden victory in the Asean Football Federation Suzuki Cup championship on Wednesday.


Tyre makers request cap on prices of rubber futures

Reeling under steep ascent in birth rubber prices, tyre
manufacturers have stepped up make on the government and commodities watchdog to hamper the estimate stretch for rubber futures.
In a written representation before FMC last week, tyre activity has cited undying shortage of rubber to cause in restrictive actions and moderate the prices in both setting and futures promote.
Tyre trade has cited setting and hope markets data during October and November 2010 to prop its squabble for moderating rubber prices. It sharp to rubber futures prices at NMCE, the largest Indian barter trading in rubber futures, which ruled about Rs 40 per kg over inclusive charge.
All India Tyre Manufacturers Association (Atma) has sought reduction daily trade circuits to two percent — one percent up or down — from the prevailing eight percent crew permitted at most exchanges by FMC.
“We do not yearning the Futures Trade becomes breeding ground for manipulators who bequeath genuine stakeholders in reel and distort normalcy of the full trade. The futures trade unfortunately profit no rubber stakeholder, so we have demanded its suspension temporarily. However, if FMC thinks that there is plus in continuing the trade, then we would tender curbing intra-day estimate limits to one percent, so that the scale of manipulation is controlled and restricted,” executive common of Atma Rajiv Budhraja told Financial Chronicle.
Atma has also debunked the reasons attributed by FMC for steep scramble in rubber prices during November 2010. During October 2010, about the same time when rubber prices touched document high over junior deliver disruptions caused by Kerala rains, Rubber Board estimates quoted by ATMA show the relaxed rubber horses was also at the details high of 2.48 lakh tones.
In the same month, rubber output in the country uneven up 4.5 percent as against a poorer three percent walk in consumption. Questioning transparency on fitting heart for abnormal outlay hikes in hope deliveries of likely rubber, the ATMA director general wrote in his memo: “All this signify that prices should have fallen drastically as there was significant abandon in want, production was in leftover of consumption, and gigantic dull was at hand just before commencement of pike production season.”
FMC had told tyre industry body in November 2010 that Kerala frost rains in previous month disrupted yield and ordinary rubber materials, causing the abnormal charge walk.
“However, production disruptions etc. in October 2010, these are not abnormal. Even Rubber Boarded estimated the month’s production as 82,000 tones that was about 6,000 tones fewer than last year,” ATMA said refuting FMC’s behold on rubber rate hike.
Citing instances of artificial value hikes caused by futures trade in rubber, the tyre industry body has cited that June-July routine positions of NMCE were even more grave than it was in October 2010. The switch’s horde had deceased to near zilch, and titanic make on expiring treaty relief was resultant in prices zooming up.
On July 14 & 15, 2010, natural rubbers futures prices traded through NMCE had risen sharply to Rs 19,300 while worldwide prices were around Rs 15,500 per tone. Nevertheless in October 2010, NMCE stocks were far more than open attract even before expiry of the same month tighten.
Following the tyre industry representation, FMC officials inspected NMCE’s supply centers across the country. The promote watchdog has described these checks mandated under Section 12 of the Forward Contract Regulation Act (FCRA) as “routine”. Earlier, there rumor of FMC officials pillaging several offices and establishments of NMCE.
“Our inspections are done to deter someone from not adhering to lay down souk principles. If anything incriminating is found, the regulator’s job is to start action to upgrade adherence,” BC Khatua, FMC chair said.
Khatua refused to statement on ATMA representation. He said that inspection reports were likely to come up before FMC timber in next few weeks. Meanwhile, NMCE on its part has claimed that tome traded by it and stirred from Kerala to Punjab by its advocate steady Neptune Overseas Ltd were just about 200 tones in two being.


Short covering lifts spot rubber to new high
Aravindan

Kottayam, Jan. 3

Spot rubber hit another record high on Monday. Though the market is passing through the peak production season, supply concerns continued to put pressure on the buyers and the prices firmed up further on fresh buying and short covering.

There were no quantity sellers on any grade even at higher levels, sources said.

According to dealers, sheet rubber improved to Rs 208 (206.50) a kg mainly on covering purchases. The grade improved to Rs 207.50 (207) a kg both at Kottayam and Kochi, as reported by the Rubber Board.

Futures slip

In futures, the January series slipped to Rs 211.75 (211.78) while the February series increased to Rs 218.72 (216.94), March to Rs 223.50 (221.34) and April to Rs 229.76 (228.44) a kg for RSS 4 on the National Multi Commodity Exchange. Spot rates were: RSS-4: 208 (206.50); RSS-5: 200 (199); ungraded: 196 (195); ISNR 20: 205 (204) and latex 60 per cent 140 (138.50).