Waiting for the direction

Rubber and tyre manufacturing is shifting to Asia and India enjoys a unique position both in terms of natural rubber production and consumption. Unfortunately India’s potential in the sector has not been fully harnessed. Certain limiting factors have come in the way of full blossomed growth. Now the Union government has constituted an expert committee to formulate National Rubber Policy, which will be chaired by the Additional Secretary (Plantations) Department of Commerce. The panel has members drawn from relevant ministries, Rubber Board, industry, growers, processors and research bodies. A notification in this regard has been issued by Department of Commerce, Ministry of Commerce and Industry, Government of India. The expert committee will submit its report including the draft of the National Rubber Policy as early as possible, say, within six months, says the notification.

The committee will examine issues relating to production, development and exports of rubber and related products and make recommendations for a broad based policy related to Natural, Synthetic and Reclaimed Rubber.

The Finance Minister Arun Jaitley is likely to present the Union Budget for 2014-2015 in Parliament on 11th July, while Rail Budget 2014-15 to be presented by Railway Minister Sadananda Gowda on 9th July. Major sectors are awaiting government’s announcement that will not only give direction to the Indian economy but will also pave the road for development of these sectors.

Today, the benchmark RSS4 grade rubber closed at `.145.50 a kg at Kottayam, while RSS3 grade closed at `.127.93 a kg at Bangkok and Malaysian SMR20 closed at `.104.38 a kg. On National Multi Commodity Exchange, June 2014 futures closed at `.146.26 a kg, July at `.145.36, August at `.143.74 and September at `.141.92 a kg. On Tokyo Commodity Exchange, June 2014 futures series closed at ¥201 a kg, July at ¥200.8, August at ¥201.8, September at ¥204.5, October at ¥206.6 and the contract for delivery in November 2014 closed at ¥208.9 a kg. On Friday, the market is expected to be in positive trend and may cross ¥211 a kg.

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Rubber4U - 15th June 2014 issue

Hopping for some relief

All India Rubber Industries Association (AIRIA) in its pre-budget submission to the Ministry of Finance has stated that finished products can easily be imported as import duty on rubber products is in the range of 0 to 10%, while the duty on raw materials for the rubber industry is between 5% and 70%. Not only the import duty on raw materials is higher, the duty is levied even on those raw materials which are not produced in the country. Quoting Capexil data, AIRIA has stated that the import duty on raw materials is the highest in India when compared to the neighbouring rubber products manufacturing countries. Rubber industry hopes on correction of inverted duty structure in the coming Union Budget.

Malaysian government announced that rubber tappers throughout the country would receive the RM500 subsidy.

On Thursday, the benchmark RSS4 grade rubber closed at `.145.50 a kg at Kottayam, while National Multi Commodity Exchange, June 2014 futures closed at `.142.43 a kg, July at `.143.68, August at `.142.11, September at `.141.07 and October at `.140 a kg and today trading in green. Today, RSS3 grade closed at `.123.96 a kg at Bangkok and Malaysian SMR20 closed at `.100 a kg. On Tokyo Commodity Exchange, June 2014 futures series closed at ¥188 a kg, July at ¥191, August at ¥192.6, September at ¥196, October at ¥199.2 and the contract for delivery in November 2014 closed at ¥201.1 a kg.

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India likely to achieve 5.5% growth

New government showing signs of economic reforms and brings in transparency in governance, the World Bank feels that India could achieve an economic growth rate of 5.5% this year as compared to 4.7% last year.

The auto industry produced a total 1,990,010 vehicles including passenger vehicles, commercial vehicles, three wheelers and two wheelers in May 2014 as against 1,742,939 in May 2013, registering a growth of 14.18% over the same month last year.

The sales of passenger vehicles declined by 3.46%, commercial vehicles segment registered a de-growth of 19.69%, three wheelers sales grew by 5.29% and two wheelers registered a sales growth of 14.03% in April-May 2014 over the same period of 2013. In April-May 2014, overall automobile exports grew by 22.23%.

According to Rubber Board data, natural rubber production during April-May 2014 dropped 7% to 104,000 tonnes compared with 112,000 tonnes during the same period of 2013. While consumption had a slight increase of 0.4% at 165,000 tonnes, compared to 164,305 tonnes in April–May 2013. Natural rubber imports were up 80% during the April–May 2014 period compared with the same period in 2013-14. A sharp drop in the international prices of natural rubber over the local prices is the chief reason for the rise in imports. While exports put up a poor show, dropping 98% to just 40 tonnes, compared to 1,723 tonnes exported during the April-May 2013 period.

Today, the benchmark RSS4 grade rubber closed at `.145.50 a kg at Kottayam, while RSS3 grade closed at `.122.91 a kg at Bangkok and Malaysian SMR20 closed at `.98.94 a kg. On National Multi Commodity Exchange, June 2014 futures were trading at `.142.75 a kg, July at `.144.35, August at `.142.22, September at `.141.70 and October at `.140.75 a kg, while Mini Rubber contract for June at `.141 a kg. On Tokyo Commodity Exchange, June 2014 futures series closed at ¥188.5 a kg, July at ¥189.8, August at ¥191.6, September at ¥195.5, October at ¥198.1 and the contract for delivery in November 2014 closed at ¥199.9 a kg.

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Be cautious

A decision by Thailand's military government to suspend a plan to sell 200,000 tonnes of rubber from stocks has done little to support Tokyo's benchmark prices. Rubber inventory in China has dropped in recent weeks to below 160,000 tonnes, but stocks in the bonded warehouses remain high at around 360,000 tonnes. The high rubber inventory in Qingdao suggests speculators are still using the commodity as collateral for financing.

Tyre grade prices are likely to fall again next week as consumers wait for bargains.

Finance Minister Arun Jaitley will meet captains of Indian industry to elicit their views on the Union Budget, which is likely to be presented in the first week of July.

Today, the benchmark RSS4 grade rubber closed at `.144.50 a kg at Kottayam, while RSS3 grade closed at `.120.09 a kg at Bangkok and Malaysian SMR20 closed at `.98.92 a kg. On National Multi Commodity Exchange, June 2014 futures closed at `.143.81 a kg, July at `.144.41, August at `.141.67, September at `.141.37 and October at `.140.790 a kg, while Mini Rubber contract closed at `.142.26 a kg. On Tokyo Commodity Exchange, June 2014 futures series closed at ¥183.6 a kg, July at ¥185.3, August at ¥186.9, September at ¥190, October at ¥192.6 and the contract for delivery in November 2014 closed at ¥193.8 a kg. On Tuesday, the market is expected to trade in positive trend.

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Read lot more in Rubber4U – 15th June 2014 issue

NR surplus may last till 2016

Rubber Research Institute of India’s collaboration with National Institute of Research and Development in Defence Shipbuilding would open a new chapter in the use of natural rubber in India. RRII had delivered prototypes of a few rubber-based articles to NIRDESH and they were found useful in defence applications.

While sixth year of global surplus may depress natural rubber prices through 2016 as maturing trees boost production and slowing economic growth would reduces demand in China. Natural rubber supply will outpace demand by 316,000 tonnes in 2016, compared with 483,000 tonnes in 2015, according to London-based Rubber Economist Ltd.

China’s economy is forecast to grow 7.3% this year, the weakest pace since 1990. Inventories in Qingdao-China, reached a record 270,000 tonnes as of 16th May, according to Qingdao International Rubber Exchange Market. Imports may expand 10.7% this year to 4.26 million tonnes, slowing from last year’s growth of 14.3%, said Association of Natural Rubber Producing Countries.

Futures in Tokyo, the global benchmark contract, have tumbled 26% this year, touching a four-year low in April. Lower prices may boost earnings for tyre makers. Shares of India's tyre makers are trading at their highs, as prices of natural rubber fell to their lowest in 4-1/2 years in the global market.

Indian tyre makers are increasing imports of natural rubber as it is cheaper overseas compared to local supplies. On Friday, the benchmark RSS4 grade rubber closed at `.144.50 a kg at Kottayam, while RSS3 grade closed at `.119.47 a kg at Bangkok and Malaysian SMR20 closed at `.98.79 a kg. On National Multi Commodity Exchange, June 2014 futures closed at `.143.10 a kg, July at `.142.99, August at `.139.93, September at `.139.45 and October at `.138.50 a kg. On Tokyo Commodity Exchange, June 2014 futures series closed at ¥182.4 a kg, July at ¥184.2, August at ¥185.6, September at ¥189.2, October at ¥191.7 and the contract for delivery in November 2014 closed at ¥193 a kg.

For latest rate of Currency Exchange: www.rubber4u.com/Statistic/Notices

What our readers say: http://rubber4u.com/Public/Views.pdf

Read lot more in Rubber4U – 15th June 2014 issue

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