Wednesday, March 30, 2011

Strong demand but tight supply

International Rubber Study Group has predicted strong global demand for tyres with a sustained growth and strong demand for new vehicles. The demand will originate from China and to a lesser extend India. The years through to 2020 will be a period of opportunity for tyre makers and the replacement market. With around 70% of natural rubber and 50% of synthetic rubber going into tyre production, global rubber consumption is set to follow increased tyre manufacturing activity.

According to Association of Natural Rubber Producing Countries, global natural rubber production is forecast to reach 10.06 million tonnes in 2011, up from a previous estimate of 9.7 million tonnes. The supply growth this year comes from expansion in yielding area by an expected 203,000 hectares and improvement in yield. About 114,500 hectares of trees planted in 2004 and a portion of 173,000 hectares planted in 2005 are expected to have opened for tapping.

According to Association of Natural Rubber Producing Countries, natural rubber inventories will remain tight around the world. Prices of rubber have dropped more than 12% since striking a record above $6 per kg in February, as economic concerns triggered by the unrest in the Middle East and worries about the impact of earthquake and tsunami in Japan. However, the momentum of recovery has eased towards the end of March caused by a bearish demand outlook.

Read lot more in Rubber4U – 1st April 2011 issue

Wednesday, March 23, 2011

Invition of inputs for formulation of Rubber Board Schemes for 12th Five Year Plan

Rubber Board has invited suggestions from all the stakeholders for formulating the Board’s schemes for the 12th Five Year Plan to be implemented from the year 2012-13. Internationally renowned agricultural scientist and Member of Parliament Dr. M.S. Swaminathan would chair the National Committee which has been constituted for the evaluation. The committee comprising experts from different disciplines would critically look into all the schemes now being implemented in the fields of production, processing and marketing of natural rubber and also research in rubber.

Sheela Thomas, Chairperson of Rubber Board said that an evaluation of these schemes would be conducted so as to generate inputs for the formulation of 12th Plan schemes. In order to give an opportunity for all sections of the public to have their say in plan formulation, the Board has scheduled a series of consultations with various segments of rubber industry stakeholders. The observations and suggestions received from the stakeholders would be considered with seriousness while formulating the 12th Plan proposals of the Board, subject to the guidelines and priorities set up by India Government and Planning Commission.

The development schemes of the Rubber Board are part of Five Year Plans implemented by the India government.

Read lot more in Rubber4U – 1st April 2011 issue

Sunday, March 20, 2011

Industry seek lower import duty on latex

Latex is the first stage output of the rubber tree and is processed to obtain natural rubber. Currently import duty on latex stands at 70% even as that on the finished product is less than 7.5%. Latex prices have surged from around Rs 55 a kg in January 2009 to Rs 117 at present, after having peaked to Rs 148. While natural rubber is attracting duty at Rs 20 a kg at current prices, latex is attracting duty around Rs 82 a kg.

The growing demand and prices has prompted All India Rubber Industries Association to write to the Finance Ministry pointing out that the increase in price of latex is threatening the very survival of the latex consuming industry, which comprises mainly of small units. While considering the reduction in customs duty on natural rubber to 7.5% for a limited quantity till 31st March 2011 and subsequently a cap of Rs 20 per kg, the Government should have considered a reduction in customs duty on rubber latex as well.

It is surprising that the import duty on latex has been gradually enhanced from 25% in 1999-2000 to 70%, while that on finished goods has been reduced from 40% to less than 7.5% during the same period. The facilitated import of finished goods is antithetical to the Government's avowed policy of enhancing domestic value addition. A large number of the small and medium scale units are not able to pass the price hike to the consumers, said AIRIA President - Vinod Simon.

Mean while, International Rubber Consortium acting Chief Executive Yium Tavarolit said that IRCo, a consortium of rubber producting countries including Thailand, Indonesia and Malaysia, which collectively account for some 70% of global natural rubber output, will likely convene a meeting with both private and public stakeholders to mull price stabilization measures this week. We will propose that exporters not export rubber at certain price levels that are below market fundamentals.

Read lot more in Rubber4U – 1st April 2011 issue

Friday, March 18, 2011

NR prices bounce back and narrows the gap

The natural rubber market is expected to rebound due to favourable fundamentals, such as strong economic growth of China and India coupled with anticipated higher average oil prices in 2010. Natural rubber prices today rose by Rs 6 to Rs 221 per kg in the domestic markets and in the international market at Bangkok it rose by almost Rs 19 to Rs 227.37 per kg today as against Rs 208.51 yesterday.

The prices in the spot markets has risen on back of price adjustment in the major international spot and future markets. A higher level of NR price is expected especially in view of tight global supply and declining stocks. There could be minor adjustments in the NR prices in the coming days.

It is also expected that Thailand, Indonesia and Malaysia would probably delay exports to counter a price slump.

Read lot more in Rubber4U – 1st April 2011 issue

Wednesday, March 16, 2011

Rubber up by Rs 14/- a kg.

World natural rubber markets remained volatile in the face of the 11th March 2011 earthquake, tsunami and nuclear plant disaster that struck northern Japan. After a fall in prices, today natural prices rose by Rs 14 to Rs 201 per kg at Kottayam, due to slight recovery in global markets. Natural rubber prices at Bangkok marginally gain by Rs 3.24 to Rs 204.62.

Domestic natural rubber price recovered due to marginal recovery in the Tokyo Commodity Exchange (TOCOM). But at this moment nobody can state for sure that the recovery in rubber markets would continue as international markets are still reeling under pressure of the shutdown of almost whole of the economy in Japan. The disruption is temporary and when the world's third-largest economy starts rebuilding again the demand for everything would zoom.

Japan accounts for 7% of the global demand for natural rubber. A few plants which have to be shut down, due to power supply stoppage and safety concerns, will resume production on restoration of electricity supply. The closure these plants for a few days cannot impact on the commodity’s global demand in a significant way. The disaster is unlikely to have a noticeable impact on global economy, as Japan has not been a driver of the global recovery from the economic meltdown in 2008.

Read lot more in Rubber4U – 1st April 2011 issue

Monday, March 14, 2011

Natural rubber prices at Rs. 185/- per kg.

Natural rubber prices on 14th March reached at Rs. 185 a kg, a fall of around Rs. 56 from all time high, on the back of declining rates in the international markets. The price of rubber in the domestic market was Rs 230 per kg on 5th March, with in seven trading session the price has fallen to Rs. 185.

The prices of natural rubber have fallen in the major international physical markets like Malaysia, which affected prices in the domestic market. Natural rubber in the international market at Bangkok was being sold at Rs 223.74 per kg on 14th March, against Rs 267.53 per kg as on 7th March.

China was buying less rubber due to fears of more unrest in Libya, which could affect crude prices further and may affect automobile sales. Prices have also been affected due to the financial year coming to an end, as business houses during this time carry minimal stocks. Besides that farmers are also bringing some produce in the markets, which too had partially affected the prices.

Read lot more in Rubber4U – 15th March 2011 issue

Friday, March 11, 2011

Negative impact on crude oil

The earthquake measuring 8.9 on the richter scale struck about 382 kilometres northeast of Tokyo, accompanying tsunami. This is the seventh largest recorded earthquake and a horrific event. Much of Japan is shutdown - transportation system is not running and people are stranded. Power plants have been shut down and there is an emergency nuclear situation as technicians struggle to pump water to cool on of the nuclear reactors. One refinery is on fire and others may be shut down. At the moment the situation is a mess and the impact of the earthquake is still a bit of a fog as things get sorted out.

Japan at a standstill and refineries shut down, the demand for crude oil is going to decline. Japan consumes about 4.4 million barrels per day of crude oil with about 99% of it imported. At least for the short term Japan is going to import less crude oil. On the other hand to the extent that enough refinery damage has occurred Japan will likely offset some for the crude oil import decline with imports of refined products. How much demand Japan will have for imported refined products in the short to medium term will be a direct function as to how quickly the country gets back to a more normal way of life as well as how quickly the refining system can get back on stream. At the moment it does not look like Japan will be experiencing any crude oil shortages rather if they do experience a shortage it will be in refined products. From an oil pricing perspective the situation in Japan is likely to result in a negative impact on crude oil prices and a positive for refined products.

Read lot more in Rubber4U – 15th March 2011 issue

NR down by Rs 6 to Rs 212

Natural rubber (NR) prices fell by Rs 6 to Rs 212 per kg on 11th March, in the domestic market due to high volatility in the international physical markets and low inventories. The prices of NR in domestic physical markets follow the international market trends, which have witnessed heavy fall, as the data indicated a slowdown in the US and Chinese economies. Concern grew that raw-material demand may weaken, rubber was sold heavily as its consumption depends largely on Chinese demand.

Rubber prices fell to the lowest level in almost three months after an 8.9 magnitude earthquake struck Japan, spurring concerns the disaster may hurt the Japan’s economy and weaken demand. The August-delivery contract on the Tokyo Commodity Exchange plunged to 383.5 yen a kg, the lowest level for the most active contract since 13th December 2010.

The physical price of Thai rubber fell for eighth day amid concerns that tyre demand may decline as overseas buyers delay purchases waiting for prices to weaken further.

The prices of natural rubber at the Bangkok spot market witnessed a fall of almost Rs 22 to Rs 241.26 per kg today as against Rs 263.39 per kg on 8th March.

The sharp fall in the natural rubber prices in domestic market is because of speculation as well as international future markets and slowdown in consumption in China. Prices have also been affected due to the financial year coming to an end, during this time manufacturing sector carry minimal stocks.

Read lot more in Rubber4U – 15th March 2011 issue

Tuesday, March 8, 2011

The price of RSS4 grade closed at Rs. 222/- per kg

In the domestic market natural rubber prices fell by Rs 5 to Rs 222 per kg on the back of declining rates in the international markets. The rubber prices slumped to the lowest level in almost two months after data showed car sales in China fell for the first time since September 2009, after fuel prices rose and the government ended incentives supporting vehicle sales. Chinese car sales may not grow as much as earlier expected, given rising fuel costs and the nation’s monetary tightening. China raised the sales tax rate on small cars this year to 10% from 7.5%. It is believed that market sentiment is changing due to rising gas prices, higher borrowing costs and overall tightening in the economy. This situation has created concern about the demand for tyres.

The price of NR (RSS4 grade) in the domestic market was at Rs 230 per kg on 5th March and in the international market at Bangkok the price of RSS3 grade closed at Rs 263.39 per kg today as against Rs 270.10 per kg on 4th March 2011.

Chinese buyers have delayed purchases, waiting for prices to fall further.

Read lot more in Rubber4U – 15th March 2011 issue