Tuesday, December 31, 2013

Challenging cheerful year ahead

The rupee hit all-time lows against the U.S. dollar in late August amid a global emerging market sell-off and concerns about India's record current account deficit. While the currency has clawed back some ground since new RBI governor took office in September.

The governments of many countries have doled out economic stimulus packages for the automotive industry to add vigor to automobile manufacturing, which have led to an increase in the level of production and demand for tyres. Tyres are not only used in new vehicles, but need to be replaced in old vehicles as well due to wear and tear. Replacement is also a major market for tyres, which is steadily growing.

Imports became controversial since prices that rose to over `.195 a kg in August and dropped to around `.150 a kg during the first half of December. Prices have recovered to some extent, primarily after the government revised import duty to 20% or `.30 a kg, whichever is lower, which came into effect from 20th December 2013. Government has kept the ad valorem rate at the same level, while the specific rate is fixed. The specific rate will come into play when prices of imports fall.

In June, a positive response from the shareholders clears the path for Apollo Tyres to complete the merger process and expects to close the transaction by year end and it was slated to be the single largest outbound deal in India’s automotive industry. But US based Copper Tire & Rubber Company said it was terminating the stake sale arrangement with Apollo Tyres Ltd.

The Asian market is expected to provide a boost to the tyre industry. The U.S. and European region is projected to witness a growth below the global average, which is boosted by rubber requirements in China. Latin America and the Middle East are also expected to up the demand for tyres due to increased automotive production in the regions.

On the last day of the year, RSS4 grade closed at `.164 a kg at Kottayam. On Monday, National Multi Commodity Exchange January 2014 futures closed at `.166.55 a kg, February at `.169.05, March at `.171.92, April at `.174.90 and May at `.176.25 a kg. Tokyo Commodity Exchange, January 2014 futures series closed at ¥279.8 a kg, February at ¥275.9, March at ¥273.8, April at ¥272.9, May at ¥273.7 and the contract for delivery in June 2014 at ¥274.5 a kg. While RSS3 grade closed at `.157.49 a kg at Bangkok and Malaysian SMR20 closed at `.142.08 a kg, on Friday.

Rubber4U wishes all its readers and well-wishers a Happy & Prosperous New Year

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