Rubber4U

Rubber4U - 15th September 2013 Issue

Industrial output down

Economic growth across the 17 European Union countries grew by 0.3% in the second quarter following a six-quarter recession. Eurozone economy was poised for a solid rebound from recession, but Eurostat reported that industrial output slumped 1.5% in July from the previous month. The largest decreases in industrial output were registered in Ireland -8.7%, Malta -6.7%, Portugal -3.2%, Greece -2.8% and Germany -2.3%.

Rubber Board lowered the outlook

Rubber Board has lowered the natural rubber production outlook by 90,000 tonnes, on account of an unprecedentedly intensive southwest monsoon and an abnormal leaf fall. While addressing the 172nd meeting of the Rubber Board, chairman Sheela Thomas said natural rubber production in the country during 2013-14 is likely to be 8,70,000 tonnes in place of the 9,60,000 tonnes projected earlier. While consumption of natural rubber for the year 2013-14 is projected at 9,45,000 tonnes. The projected closing stock of natural rubber in 2013-14 is 2,70,000 tonnes. Import and export of natural rubber during April-August 2013 were 1,28,465 tonnes and 2,319 tonnes respectively.

Growers called off protest

Thailand government has promised a subsidy that should lift farmers income to around 90 baht per kg, versus a market price of around 80 baht. The rubber growers have called off planned protest for the weekend after the government doubled its subsidy for production.

Today, at Kottayam, RSS4 grade closed at `.187.50 a kg. RSS3 grade closed at `.172.81 a kg at Bangkok, while Malaysian SMR20 closed at `.158.94 a kg. On the Tokyo Commodity Exchange, September futures series closed at ¥270 a kg, October at ¥270.9, November at ¥273.3, December at ¥276.2, January 2014 at ¥279.8 and the contract for delivery in February 2014 closed at ¥283 a kg. While on the National Multi Commodity Exchange September futures closed at `.188.21 a kg, October at `.185.44, November at `.185.75 and December at `.187.58 a kg. Tommorrow one can expect the market in red.

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Protest to hurt supply

Though there is sluggish demand prevailing in the economy for automobiles, tyre production is expected to reach almost 20 crores units by 2016-17.

Rubber farmers have held protests in Thailand’s south to pressure the government to subsidize prices. Thai cabinet approved proposals from the rubber policy committee to help subsidize production costs for small rubber growers. Thailand will temporarily scrap a tax on rubber exports to support fallen prices, a move aimed at appeasing angry rubber farmers. Thailand governments attempt to calm down angry rubber growers failed, prompting thousands of growers and tappers to continue their protests now in their second week.

Rubber traded near the highest level in more than three months amid speculation protests by Thailand farmers, which may disrupt exports from the country.

At Kottayam, RSS4 grade closed at `.186.50 a kg. RSS3 grade closed at `.178.19 a kg at Bangkok, while Malaysian SMR20 closed at `.162.27 a kg. On the Tokyo Commodity Exchange, September futures series closed at ¥270 a kg, October at ¥271, November at ¥273, December at ¥276.6, January 2014 at ¥279.1 and the contract for delivery in February 2014 closed at ¥282.7 a kg. While on the National Multi Commodity Exchange September futures closed at `.187.19 a kg, October at `.186.48, November at `.187.40 and December at `.189.27 a kg.

On the sidelines of Asian Latex Conference held at Ramada Resort in Kochi, Jay Nambiar, CEO of Hevea-Tech Pvt. Ltd., Kuala Lumpur, said Kerala should find urgent techniques for reducing the dependence on labour for harvesting the rubber latex. It should either mechanise the harvesting method or should improve on the existing method. The growth of synthetic rubber market wouldn't affect the country's natural rubber market as 90% of the products are a blend of these two grades.

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Farmer’s protests even after grant of subsidies

Rubber farmers also demanded a price guarantee for their commodity, only was able to secure subsidies for production and value-added production to increase rubber consumption domestically. Thailand's Cabinet has approved 20 billion baht subsidy for 2013-2014, for rubber farmers and industry, who faced weak international prices amid poor demand for natural rubber due to slowdown in global economy.

The farmers called on the government to guarantee the price of rubber to help increase their incomes. More than 12,000 rubber farmers protested and blocked roads in Thailand's south after the government failed to answer their demands to boost declining rubber prices.

At Kottayam, RSS4 grade closed at `.186 a kg, while RSS3 grade closed at `.176.65 a kg at Bangkok, Malaysian SMR20 closed at `.163.10 a kg. On the Tokyo Commodity Exchange, September futures series closed at ¥271.4, October at ¥272.8, November at ¥275.3, December at ¥277.7, January 2014 at ¥281.4 and the contract for delivery in February 2014 closed at ¥284.3 a kg. While on the National Multi Commodity Exchange September futures closed at `.185.96 a kg, October at `.184.80, November at `.185.80 and December at `.187.47 a kg.

Read lot more in Rubber4U – 15th September 2013 issue

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