Monday, October 21, 2013

Lots of expectation against low demand

According to industry consultant and analyst LMC Automotive, global auto sales in September rose 4.5% from a year ago. China was the leading nation in September auto sales, at 1.9 million in sales. According to Reserve Bank of India's consumer confidence survey - June 2013, only 12.8% of respondents wanted to purchase a vehicle compared with 15.9% in March 2013 and 19.7% in December 2012. This suggests a steadily worsening consumer sentiment, which could negatively impact sales in coming months. There is a limited scope for banks to reduce interest rates further, considering the recent repo rate revision to 7.50% from 7.25% earlier. According to Montek Singh Ahluwalia, deputy chairman of planning commission, India’s current account deficit could drop to below 3.8% in the current fiscal.

The US government ended its partial shutdown by a last minute deal passed by both the Republican led House of Representatives and Democrat dominated Senate. Oil prices were also supported by wide expectations that the U.S Federal Reserve would delay its tapering of stimulus monetary policy.

According to China's National Bureau of Statistics, country's GDP growth accelerated to 7.8% in the third quarter of the year, up from 7.5% in the second quarter. According to General Administration of Customs, in September 2013, China’s natural rubber import increased 5.9% to 180,000 tonnes compared to the previous month. According to dealers' estimates, inventory of natural and synthetic rubber in China's bonded warehouses in Qingdao slipped to 259,600 tonnes as of 15th October, compared with 271,000 on 29th September.

Rubber prices in India have slumped on increasing imports and major consumers keeping away from the market. On Saturday, RSS4 grade closed at `.161.50 a kg at Kottayam, showing a negative trend. While currently, National Multi Commodity Exchange November futures trading at `.161.35 a kg, December at `.163.30, and January 2014 at `.166.20 a kg, at 12.35 IST. Monday, RSS3 grade closed at `.157.58 a kg at Bangkok, while Malaysian SMR20 closed at `.143.97 a kg. While Tokyo Commodity Exchange, October futures series closed at ¥253.9 a kg, November at ¥255.6, December at ¥257.9, January 2014 at ¥261.1, February at ¥264.7 and the contract for delivery in March 2014 at ¥268.4 a kg. On Tuesday most probably market is expected to be in green.

Read lot more in Rubber4U – 1st November 2013 issue

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