Tuesday, December 13, 2016

Positive trend

Expectations of robust demand from China boosted rubber to a three-year high after buoyant car sales data for November. Natural rubber prices have soared to their highest since December 2013 on anticipation of increased Chinese demand and higher prices for competing synthetic rubber.

The most actively traded contract on the Tokyo Commodity Exchange climbed 3.7 yen to 259.7 yen ($2.25) per kilogram Tuesday, marking a third straight trading day of gains.

An agreement by OPEC, Russia and other oil producers outside the bloc to cut output has powered a sharp rise in crude oil prices and in turn will push synthetic rubber prices higher.

The China Association of Automobile Manufacturers reported vehicle sales of 2.9m in November, up 16.6% y-o-y. Chinese consumers have rushed to purchase vehicles before the tax breaks expire at the end of the year. If demand remains dynamic, more rubber will be needed for manufacturing tyres.

Rubber prices have also been supported by heavy rainfall in Thailand, which led to disrupted harvesting. The Association of Natural Rubber Producing Countries last week said it expected the production of its members to increase only 0.1% in 2016, while demand is forecast to rise 4.1% compared to previous year.

The benchmark RSS4 grade rubber closed at `.131 a kg at Kottayam, while RSS3 grade closed at `.151.66 a kg at Bangkok and Malaysian SMR20 closed at `.129.02 a kg. On National Multi Commodity Exchange the last traded price for December 2016 futures was `.133.32 a kg, January 2017 at `.137.88, February at `.140.51 and March at `.142.93 a kg. Tokyo Commodity Exchange December 2016 futures series closed at ¥254 a kg, January 2017 at ¥255.3, February at ¥253.2, March at ¥255.3, April at ¥256 and the contract for delivery in May 2017 closed at ¥259.7 a kg. On Wednesday, most probably Tocom futures contract for delivery in May 2017 may trade in the range of ¥260 & ¥270 a kg.

To read Rubber4U – 15th December 2016 issue: http://rubber4u.com/Public/Abcd.pdf
For 2016-17 Rubber Forecast: http://rubber4u.com/Public/RForecast.pdf

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