RBI credit policy

The Reserve Bank of India kept repo rates unchanged at 8%, while reducing cash reserve ratio by 25 basis points to 4.25%, which will release Rs 17,500 crore into the system. Global growth prospects have deteriorated further and downside risks have increased, hence GDP growth forecast for FY13 has been cut to 5.8% from 6.5% and inflation target has been raised to 7.5% from 7.0%. Slower growth and excess capacity in some sectors will help moderate core inflation. The large current account deficit and the fiscal deficit continue to pose significant risks to both growth and macroeconomic stability. Industrial output picked up marginally in August and the services PMI showed a modest improvement in September, but the outlook remains uncertain.

Read lot more in Rubber4U – 1st November 2012 issue

International Rubber Conference begins

While delivering the key note address in the inaugural session of IRC 2012 at Kovalam-Kerala, India, Rubber Board of India, chairperson - smt. Sheela Thomas said International Rubber Research and Development Board can play an important role in evolving international cooperation in areas of mutual interest pertaining to natural rubber cultivation processing, trade and industry. A healthy relationship among all stakeholders in the rubber sector is what is required today.

Rubber Board chairperson reminded the gathering about the Board’s commitment towards bringing about positive changes in the country’s natural rubber sector.

The three day International Rubber Conference will have two days of intensive deliberations – focusing on Challenges to Rubber Industry on the first day; and Farm Mechanisation on the second day. A field trip is arranged on the third day to the rubber holdings and Rubber Producers’ Societies in Kanyakumari District of Tamil Nadu.

Read lot more in Rubber4U – 1st November 2012 issue

Government unveils medium term fiscal plan

Indian Finance Minister, P Chidambaram at a press conference unveiled a medium term fiscal consolidation plan to sharply reduce fiscal deficit to 5.3% of the GDP and reduce it to 3% by 2016-17.

The minister said the government will protect all its flagship programmes for the poor. But did not indicate any plan to decontrol fuel prices, which creates a big dent in the government’s finances. Minister expressed confidence that the CAD will be fully financed by capital inflows through foreign direct investments, foreign institutional investments and external commercial borrowings.

The Reserve Bank of India, which has time and again asked the government to take corrective measures to arrive at a credible path to fiscal consolidation, is reviewing its monetary policy tomorrow. There are expectations that the central bank may cut its policy rate.

Read lot more in Rubber4U – 1st November 2012 issue

10th IRC meet at Kovalam

International Rubber Research and Development Board, an R&D platform of natural rubber producing countries, will hold its 10th International Rubber Conference at Hotel Samudra, Kovalam in Kerala-India, beginning from Monday, 29th October till 31st October 2012.

Rubber Board of India is hosting this event. More than 400 delegates, including representatives from natural rubber producing countries, growers, nursery owners, industrialists, agri-input distributors and persons from related areas are expected to attend this event.

On Friday, as the Commerce Department reported a 2% rise in U.S. third-quarter GDP, the crude oil futures prices turned higher in hopes of rising oil demand. Prices swung from a drop of 22 cents to a gain of about 27 cents in reaction to the news.

Read lot more in Rubber4U – 1st November 2012 issue

Expecting much action today

Oil prices were mixed in Asia today as traders await the release of US third-quarter growth figures later in the day. Market opened lower with investors mostly trading cautiously following a weak lead overnight. Tokyo rubber futures for November fell and closed at ¥248.5 per kg, as investors shied away from risk due to worries about the health of the global economy. The price of RSS3 grade at Bangkok closed at `.166.83 per kg. In India, car sales fell 5.4% in September, the second consecutive monthly slide.

Chennai based Ram Charan Company engaged in the business of supplying raw materials for rubber, plastic, inks, and adhesive industries, has signed a deals worth `.120 crore with global industry leaders - with a carbon black major - Birla Carbon and Lanxess, a global polymer manufacturer, to promote their products in India.

All eyes will be on the US GDP growth figure, which will perhaps give a guide for the future plan.

Read lot more in Rubber4U – 1st November 2012 issue

Focus on growth projects having positive returns

The largest U.S. chemical maker - Dow has spent much of 2012 grappling with weak demand, but still company posted a better than expected quarterly profit, helped in by cost cuts. The company decided to slash spending on capital projects, saying the cuts will not deter the chemical maker from meeting aggressive earnings targets.

Andrew Liveris, Chief Executive of Dow Chemical said they will reduce the capital expenditure budget by $100 million in 2012 and $700 million in 2013. Reducing spending on growth projects saves cash in the short term but can limit options in the future if certain projects haven't been properly funded. Company must stop future growth projects that are no longer affordable in this environment. The company will focus on growth projects with positive returns in the far-distant future.

Dow announced another expansion project, saying it would build a world-scale synthetic rubber plant somewhere on the U.S. Gulf Coast and hopefully have it online by 2016.

Read lot more in Rubber4U – 1st November 2012 issue

Widening demand-supply gap to benefit whom

Natural rubber futures in India are likely to ease following losses in overseas markets and as supplies in local markets start improving amid sluggish demand from tyre makers, as automakers are placing fewer orders for tyres.

The consumption of natural rubber rose 5.6% to 5,01,940 tonnes in the first half of the current financial year, while production rose only 1.1% to 3,95,700 tonnes. The demand-supply gap is widening and the shortage might stand at about 1,50,000 tonnes. However, the Board does not see a shortage in the domestic market, as the projected opening stock in April stood at 2,36,275 tonnes and the rubber consuming industry is mandated to import about 1,50,000 tonnes through duty-free channels.

Currently, tyre industry address the supply crunch through imports, which have risen to 1,12,640 tonnes. Rubber imports could increase as a widening gap between local and overseas prices prompts tyre manufacturers to bring in more imports during the peak domestic natural rubber production season. Farmers are not selling now, but they are continuing tapping. Daily rubber supplies to markets are lower than normal as farmers are holding back produce. By mid-November this will lead to higher stocks and finally they will be forced to sell their produce in the uncertain market and could depress prices in the future. Even there is no improvement in natural rubber exports.

Usually natural rubber imports decreases during the October-March period when local supplies increases. Despite this, tyre manufacturers are inking new import deals as purchasing domestically is expensive. The spot price of RSS4 grade rubber in the Kottayam market closed at `.183 per kg, while Malaysian SMR 20, which Indian tyre makers prefer to import, was at `.156.57 a kg. The difference is very big. It makes imports viable even if there is a duty on imports.

Considering the current pace of imports, the total import would likely exceed 2,50,000 tonnes by the end of current financial year. Indian tyre makers are gradually trying to bring down their dependency on local supplies.

Read lot more in Rubber4U – 1st November 2012 issue