Production down, prices moves up

India’s natural rubber production fell 12.9% to 54,000 tonnes, while consumption also fell 2.3% to 82,000 tonnes in June 2013, when compared to same month of 2012. Natural rubber imports fell 4.97% to 19,695 tonnes in June, compared to same month of 2012.

In the Indian market, shortage of natural rubber and decrease in production has pushed up the prices. At Kottayam, RSS4 grade closed at `.195 a kg, while RSS3 grade closed at `.154.10 a kg at Bangkok and Malaysian SMR20 closing at `.131.69 a kg. On the Tokyo Commodity Exchange, July futures series closed at ¥240.4, August at ¥241.5, September at ¥243, October at ¥243.7, November at ¥244.7 and the contract for delivery in December closed at ¥245.1 a kg. While on the National Multi Commodity Exchange July futures were trading at `.193, August at `.188.15, September at `.179, October at `.171.99, November at `.166 and December at `.169 a kg.

Read lot more in Rubber4U – 15th July 2013 Anniversary issue

Rubber rebounds as oil rally

Rubber climbed after oil in New York surged to a 15 month high, boosting the appeal of natural rubber as an alternative to synthetic rubber. Rubber chased gains in oil amid speculation that the U.S will maintain monetary stimulus to support growth. Rubber for delivery in December on the Tokyo Commodity Exchange advanced to ¥245.1 a kg, after touching a low of ¥235.6 a kg.

According to the customs agency, natural rubber imports by China, has decreased to 130,000 tonnes in June 2013, from 163,317 tonnes in June 2012 and 177,400 tonnes in May 2013.

Heavy rains disrupting rubber tapping in Kerala and the growers are holding on to the available stock in anticipation of further rise in natural rubber prices. Currently rubber is at its nine month high.

Cut in global growth forecast

The International Monetary Fund has cut its forecast for world economic growth for a third time during the year, due to slowing emerging markets and a prolonged recession in the Euro zone. It now expects world output to expand by just 3.1% in 2013, but IMF expects a slight acceleration in growth in 2014 to 3.8%.

The price of crude oil currently trading at US$104.68 (at 9.40 GMT) and if the price rises above US$105 per barrel, will have a negative impact on the economy and also will end up affecting consumer spending in a very negative way.

Today, RSS3 grade closed at `.155.10 a kg at Bangkok, while Malaysian SMR20 closed at `.130.12 a kg. On the Tokyo Commodity Exchange, July futures series closed at ¥231.9, August at ¥233.3, September at ¥232.7, October at ¥233.6, November at ¥234.4 and the contract for delivery in December closed at ¥234.7 a kg. While on the National Multi Commodity Exchange July futures were trading at `.195.52, August at `.192.01, September at `.184.16, October at `.177.47, November at `.171.90 and December at `.172.48 a kg., at 2.30 pm IST.

Is rubber inching up for a fall?

Oil prices climbed after jobs data from the US beat expectations, boosting confidence in the world’s biggest economy. Rubber climbed as Japan’s currency declined to a five-week low against the dollar, boosting the appeal of yen-denominated contracts. The currency is currently trading at 101.21 against dollar at 11.33 GMT. Today, rubber contract on the Tokyo Commodity Exchange for delivery in December declined to ¥240.1 a kg, after touching a high of ¥247.8 a kg.

In the Indian market, shortage of natural rubber is pushing up prices. At Kottayam, RSS4 grade closed at `.190 a kg, while RSS3 grade closed at `.160.24 a kg at Bangkok and Malaysian SMR20 closing at `.131.96 a kg.

India’s Finance Ministry has extended the validity of existing anti-dumping duty on rubber chemicals - MBT, CBS, TDQ, PVI, and TMT imported from China and PX-13 (6PPD) imported from South Korea, will remain in force till 4th May 2014.

Will rubber lose the ground?

The Egyptian army seized control of the government on Wednesday, ousting the country’s first democratically elected president. Oil prices driven by the events of a military coup in Egypt reached their highest point of the year at $103.22 a barrel. The benchmark for oil prices in Europe - Brent crude rose to $107.43 a barrel.

The benchmark Tokyo rubber futures rose as solid U.S. jobs growth data late last week lifted hopes of improvement in the world’s top economy and caused the dollar to rise against the yen. On Monday, the Tokyo Commodity Exchange rubber contract for December delivery most probably will touch a low of ¥241 per kg.

Shortage pushing up prices

Asian butadiene prices are at a three & half year low amid weak demand and a glut of synthetic rubber stocks. The export of synthetic rubber feedstock fell 32% m-o-m in May to 16,458 tonnes, from South Korea. China Petroleum and Chemical Corp (Sinopec), slashed its ex-works prices for styrene butadiene rubber by 5-6% effective Wednesday. Sinopec Qilu Petrochemical is offering SBR1502 in East China at Yuan 10,700/mt, or about $1,364/mt on an import parity basis. The price cuts are a result of poor demand and high synthetic rubber stocks in China.

Rubber at Qingdao, which makes up the bulk of China's inventories, has been offered at a discount to prices in Southeast Asia, after stocks rose well above the usual level of 250,000 tonnes, indicating ample supply. Rubber prices were at multi-year lows as Chinese tyre makers have been forced to reduce imports and turn instead to country's bonded warehouse supplies and also U.S and European demand for the commodity at its low.

The shortage of natural rubber is hitting the operations of rubber goods manufacturing sector and this situation is pushing up domestic prices (at `.189 a kg), now higher by `.28 a kg compared to RSS3 grade, which closed at `.160.39 a kg at Bangkok and Malaysian SMR20 closing at `.133.66 a kg, setting the stage for a likely surge in import of natural rubber or for implementation of new duty structure. While Tokyo Commodity Exchange, December futures series closed at ¥246.9 a kg, after touching a low of ¥241.3 and a high of ¥247.7a kg.

Auto sales continues down trend

On global front, European Markets carried the momentum even after the bad data from China and markets performed well on the hopes that in Thursday's ECB meeting, interest rates and stimulus will be kept unchanged and all eyes are fixed on how the US markets will perform.

In April-May 2013-14, the Indian eight core sectors registered a growth of 2.4% as against 6.5% in the same period last year. The decline in the growth rate in May was mainly on account of negative growth witnessed in the production of coal, crude oil, natural gas and fertiliser.

Auto sector has witnessed de-growth in the month of June 2013 amidst an overall decline in the auto industry. Car companies continue to struggle as they reported lower sales in June because of a variety of reasons ranging from high interest rates, fuel prices to declining economic growth. The depreciating rupee resulting in spiralling fuel costs coupled with high interest rates and the additional excise duty on SUVs has further dampened the industry.

Supply of natural rubber is extremely tight in the domestic markets, RSS4 grade closed with a positive note at `.181 a kg at Kottayam. Today, RSS3 grade closed at `.161.28 a kg at Bangkok, while Malaysian SMR20 closed at `.132.82 a kg. On the Tokyo Commodity Exchange, July futures series closed at ¥240, August at ¥240, September at ¥241.6, October at ¥243.2, November at ¥244.6 and the contract for delivery in December closed at ¥245.6 a kg, after touching a low of ¥239.3 a kg. While on the National Multi Commodity Exchange July futures were trading at `.190.52, August at `.186.30, September at `.179.74, October at `.174.76.06, November at `.173.17 and December at `.173.26 a kg., at 12.10 pm IST.

Read lot more in Rubber4U – 15th July 2013 issue