Market likely to be uncertain

The Society of Motor Manufacturers and Traders (SMMT) have reported that 1,528,148 cars were manufactured in the UK in 2014, the best figures since 2007.

On 20th January, International Monetary Fund reduced its global economic growth forecast for 2015 to 3.5% and 3.7% in 2017 on the back of weaker momentum in all major economies, stoking fresh fears about the strength of crude demand. US benchmark West Texas Intermediate (WTI) for February fell to US$45.59 a barrel, while Brent North Sea crude for delivery in March, the international benchmark, dropped to US$48.79 a barrel in London.

With this, synthetic rubber has become cheaper. The weaker yen also lent support to investor sentiment. The Tokyo Commodity Exchange rubber contract for June delivery closed at ¥198.9 a kg. There is no other strong fundamental reason to buy rubber now as the global economy is slowing.

China, world's second largest economy, reported its 2014 GDP growth at 7.4%, the lowest growth rate since 1990. Lack of demand and buying support from Chinese buyers was also a factor that would contribute to the market condition next week. Rubber market is likely to be uncertain and would adopt a wait and see attitude next week as there was no direction for the market.

The economic outlook has forced natural rubber prices to fall further, which would cause smallholders to stop tapping. If growers abandon the rubber trees, it will eventually affect natural rubber production.

The benchmark RSS4 grade rubber closed at `.125.35 a kg at Kottayam, while RSS3 grade closed at `.104.47 a kg at Bangkok and Malaysian SMR20 closed at `.86.74 a kg. On National Multi Commodity Exchange February 2015 futures closed at `.120.27 a kg, March at `.121.20 and April at `.121.77 a kg. On Tokyo Commodity Exchange, January 2015 futures series closed at ¥187 a kg, February at ¥192.4, March at ¥195.5, April at ¥198.2, May at ¥198.2 and the contract for delivery in June 2015 closed at ¥198.9 a kg. On Monday, most probably Tocom futures contract for delivery in June 2015 may trade in the range of ¥196 & ¥202 a kg.

To read Rubber4U – 15th January 2015 issue: http://rubber4u.com/Public/Abcd.pdf

For 2014-15 Rubber Forecast: http://rubber4u.com/Public/RForecast.pdf