AITDF seek removal of antidumping duty

Due to falling demand for tyres and depreciating rupee making imports costlier, All India Tyre Dealers’ Federation (AITDF) have urged the government to immediately notify the removal of anti-dumping duty.

In August 2011, the Customs, Excise and Service Tax Appellate Tribunal had set aside the antidumping duty levied by the government. The tribunal directed the government to immediately withdraw anti-dumping duty on tyre imports from China and Thailand. Department of Commerce had imposed duty of $32 to $90 on import of truck or bus radials. According to AITDF, the notification is yet to be published in the official gazette, although the government has honoured the order of the tribunal.

According to S P Singh, AITDF convener, anti-dumping duty continues to be levied even now, we, therefore urge the government to immediately notify the withdrawal of the duty. The removal of antidumping duty will help the trade and will provide relief to radial tyre users in the country.

Read lot more in Rubber4U – 1st January 2012 issue

NR modified bitumen may be used in construction & maintenance of road

As natural rubber modified bitumen improves the durability of roads by reducing susceptibility towards temperature variations and improving the desirable properties, the use of natural rubber modified bitumen has been specified by the Ministry of Road Transport & Highways for binder courses and wearing courses laid on National Highways. The Central Road Research Institute has tested the technology for use of modified bitumen including natural rubber modified bitumen in construction and maintenance of roads under Ministry’s sponsored research scheme.

Read lot more in Rubber4U – 1st January 2012 issue

Seeking imposition of Safeguard duty

The Association of Carbon Black Manufactures on behalf of Phillips Carbon and Hi-Tech Carbon, has requested the Directorate General of Safeguards (DGS) for immediate imposition of safeguard duty on imports of carbon black originating from China for a period of four years, as the profitability of the domestic industry has been affected due to increased imports.

According to the Association, the imports from China have increased from 13,944 MT in 2008-09 to 70,193 MT in 2011-12.

The government has decided to investigate whether the increased import of carbon black from China was hurting the domestic manufacturers who are seeking imposition of a safeguard duty. 

Read lot more in Rubber4U – 1st January 2012 issue

Regional physical market to create a new benchmark

Rubber has lost 33% on the Tokyo Commodity Exchange this year from a peak due to Europe's debt crisis raising concern that demand may decline. Today, January & May delivery contract closed at 264.7 yen & 276.9 yen a kg respectively, on Tocom. Representatives from the three governments - Thailand, Indonesia and Malaysia, are meeting to discuss stabilising prices and proposed to establish a physical market.

There’s a desire from the governments of the three countries to set up a market as soon as possible that would be based on the real supply and demand fundamentals. Establishment of a market would help producers trade with more transparent and reliable prices. The contract would most likely trade in dollars, said Tjahjono Budiarto Tjandra, chairman of the Committee on Strategic Market Operations at the International Rubber Consortium Ltd., in Bali.

Establishing a physical market may involve the Indonesia Commodity & Derivatives Exchange, the Agricultural Futures Exchange of Thailand and the Malaysia Derivatives Exchange.

Read lot more in Rubber4U – 15th December 2011 issue

EU summit treaty failed

Today crude oil prices dipped after Europe's leaders failed to agree a new treaty to tackle the debt crisis. Brent North Sea crude for delivery in January shed 32 cents to $107.79 a barrel. New York's main contract, light sweet crude for January, dipped 23 cents to $98.11 a barrel. The market was very nervous before the summit and the fear is that Brent crude oil prices will continue to fall towards the $100 a barrel mark, prompted by the lack of stability and the knock-on economic effect of the confusion across Europe.

However, 23 EU nations - including the 17 that use the euro - agreed to sign an accord to make greater fiscal discipline legally binding. The 17 euro members are now negotiating to form into a separate euro group where strict controls over budgets will be devolved to Brussels.

European Union president Herman Van Rompuy said euro area and other member states will aim to make available additional resources of up to 200 billion euro to the International Monetary Fund. The European Stability Mechanism (ESM) would come into force earlier than first mooted, in July 2012.

Today, RSS-4 grade rubber declined and closed at Rs. 201.50 a kg at Kottayam. RSS-3 grade increased to Rs 183.30 a kg at Bangkok. At Tokyo Commodity Exchange futures prices for December delivery declined and closed at ¥260.3 a kg, for January delivery closed at ¥267.5 a kg, February closed at  ¥272.6 and ¥274.8 a kg for March 2012 contract.

Read lot more in Rubber4U – 15th December 2011 issue

Positive outlook

Market sentiment regarding the eurozone sovereign debt crisis improved after Italy's new government put forward an package aimed at balancing the country's budget by 2013 and also European policymakers are working on new steps to resolve the eurozone sovereign debt crisis ahead of a key EU summit starting on Thursday.

The 30 billion euro package unveiled by Italian Prime Minister Mario Monti on 4^th December, was taken as a positive cue by the market because the measures outlined not only Italy's plans to cut spending but also its growth strategy for the years ahead. On the other hand, US jobs report indicated that the unemployment rate in November fell to a 32 month low of 8.6%.

The natural rubber prices have built on last week's gain and remain firmly supported on losing ground due to worries about the outlook for the global economy. The latest estimates of demand and supply of natural rubber by the Association of Natural Rubber Producing Countries indicates that the supply would be 5.6% low (to 10.02 million tonnes) in 2011 and 3.6% in 2012.

On the other hand various industry players are planning to pour in huge investments to increase capacities across their product portfolio. These capacity expansion plans are anticipated to ultimately result into high tyre production, which is expected to grow around 10% during 2011-2014.

Read lot more in Rubber4U – 15th December 2011 issue

No further cut in import duty

Automotive Tyre Manufacturers' Association (ATMA) had made a request to allow import of two lakh tonnes of natural rubber duty free, to which the Centre has ruled out further reduction in import duty.

Since 1^st April 2011, natural rubber attracts basic customs duty of 20% ad-valorem or Rs 20 a kg, whichever is lower. A further concessional rate of basic customs duty of 7.5% ad-valorem has been provided to imports of natural rubber up to an aggregate quantity of 40,000 tonnes during financial year 2011-12.

Taking into account the interest of domestic growers, there is no proposal to carry out a further reduction in import duty on natural rubber at this stage, said S.S. Palanimanickam, Minister of State for Finance, in a written reply to a Lok Sabha question.

Read lot more in Rubber4U – 15th December 2011 issue

Exporters see demand drop

The prices of natural rubber continued to fall, pushing down the growth in the commodity's global supply this year to 5.6% (to 10.023 million tonnes) from an earlier estimated growth of 6%. The current indications are that the price fall started impacting on the supply. The total supply from member countries of the ANRPC, which grew annually at 10.6% in Q1 and 10.7% in Q2, had slowed down to 2.5% in the third quarter. It is expected to slow down further to 0.6% in the fourth quarter.

According to a rubber exporter from South Sumatra - Indonesia, the rupiah’s recent weakness gives rubber producers room to breathe despite lower rubber production and a possible price drop. The country is entering a heavy rainy season, which will reduce natural rubber production.

Rubber prices are down to just above $3 per kg, compared to $6.4 per kg in February. The price drop stems from worries about the economic slowdown in European countries, which account for 11% of total global demand for natural rubber. Demand from the 11 members of the Association of Natural Rubber Producing Countries, which account for 57% of global consumption, is estimated to rise 2.9% next year to 6.3 million tons.

The dollar could be volatile for the next month, or until political leaders find a solution to the euro zone crisis. Asian currencies will rise again in six to nine months’ time as investment returns to the region.

Read lot more in Rubber4U – 1st December 2011 issue

Defaulters to be blacklisted

The top NR producing countries are blacklisting the buyers who have failed to honour their contracts after the panic selling in the physical market. Thailand, Indonesia and Malaysia backed off from a plan to boost up rubber prices at a meeting in Bangkok, but pledged to prevent defaults from recurring after buyers, mostly from China, wanted to renegotiate contracts as prices plunged to US$3 a kg.

There have been some contract defaults and that was mentioned in the weekend meeting in Bangkok, that's why we need to stop further defaults by blacklisting those buyers who have defaulted. The group was assessing the number of defaulted cargoes and would send the names of errant companies to the International Tripartite Rubber Council (ITRC). Other exporter associations in Indonesia and Malaysia would be doing the same, so that the ITRC can blacklist them, said Pongsak Kerdwonbundit, president of the Thai Rubber Association.

Read lot more in Rubber4U – 1st December 2011 issue

Speculators creating heavy volatility

According to Forward Market Commission (FMC), Futures trading in natural rubber was 23 lakh tonnes during the year 2010-11. But physical delivery of natural rubber in futures market was just 16,000 tonnes. Rubber Board has already made a recommendation for reduction in intraday circuit limits in futures trading.

The natural rubber consuming industry has written to FMC to either put rubber futures on hold or keep intraday price fluctuation limit from the current 4% to 1%. All India Rubber Industries Association (AIRIA) president Vinod Simon says that speculation in domestic futures gave least consideration to demand-supply fundamentals. It is quite puzzling why should domestic natural rubber prices hold significantly higher than international prices when we are in midst of peak production months and carrying more than 2.5 lakh tonnes as suggested by Rubber Board.

Automotive Tyre Manufacturers Association (ATMA) has also pointed to speculation in futures impacting the spot market. The recently expired November contract had open position of 1,491 tonnes on 1st November, and stocks in warehouses of just 110 tonnes. This held the contract under pressure till expiry. Resultant trends were just not in sync with fundamentals.

The intraday circuit limits were increased to 4% to increase liquidity as natural rubber prices had dropped significantly three years ago. However, at current prices, the futures can be legitimately taken up or down by Rs.8 a kg on the same day.

Today, the spot rubber RSS-4 grade closed at Rs. 190 a kg at Kottayam. The December series slipped to Rs 191.80, January to Rs 193.50, February to Rs 195.25 and March to Rs 197.25 a kg on National Multi Commodity Exchange (NMCE). RSS-3 grade increased to Rs 173.73 a kg at Bangkok. The November futures finished marginally higher at ¥254.08 on Tokyo Commodity Exchange (TOCOM).

Most probably on 18th November Indian Stock Market will open in red and if so happens then one can expect domestic natural rubber prices moving further down.


Read lot more in Rubber4U – 1st December 2011 issue

NR in weak territory

India has been increasing fuel prices in order to ease its fiscal burden and inflation in double digit. The hike in petrol prices and also hike in interest rates has impacted the auto sector, resulting in weak demand for the vehicles. The sluggish growth in auto sales has impacted the rubber goods manufacturing sector also.

Most probably the next opening of Indian Stock Market may be in red and if so happens then one can expect domestic NR prices moving further down. On 9^th November, as predicted RSS4 grade closed (below our forecasted figure made on 1^st November) at Rs. 196 a kg at Kottayam, RSS3 grade in the international market at Bangkok closed at Rs 174.70 per kg, SMR-20 closed at 171.97 a kg at Kuala Lumpur. At Tokyo Commodity Exchange futures prices for November delivery closed at ¥264 a kg, for December delivery closed at ¥265.7 a kg and ¥270.7 a kg for March 2012 contract.

Natural rubber continues to remain in the weak territory and further downward trend can be expected during the week, with a strong support at Rs. 185 per kg.

Read lot more in Rubber4U – 15th November 2011 issue

Expecting further fall in rubber prices

Natural rubber continues to remain in a weak territory. The developments in Greece, Italy and uncertainty over global economic growth, eroded all the optimism that prevailed in the market. The reports of high inventories and Chinese buyers wanted to renegotiate contracts after NR prices fell below $4 a kg. and tracking global markets, natural rubber prices in the Indian market plunged too. The most active Dec Futures on NMCE closed at 205.64 a kg, while in the physical market RSS4 closed at Rs. 200 a kg.

Natural rubber prices turned weak, as global economic uncertainty is casting dark shadows over its demand, there is no selling pressure from dealers or growers and the market lost ground on buyer resistance. Sentiments were also affected by the fall in stocks and commodities around the globe, though the local markets still experienced short supplies. Spot market prices dropped tracking sharp losses on the National Multi Commodity Exchange (NMCE). At NMCE, rubber future prices for November delivery closed at Rs 205.64 per kg and at Rs. 206.50 per kg for March 2012 delivery. RSS4 grade closed at Rs. 200 a kg at Kottayam, RSS3 grade natural rubber in the international market at Bangkok closed at Rs 180.20 per kg, SMR-20 closed at 176.36 a kg at Kuala Lumpur. At Tokyo Commodity Exchange futures prices for November delivery closed at ¥273 a kg, for December delivery closed at ¥275 a kg and ¥280.2 a kg for March 2012 contract.

On 1^st November, we have forecasted that NR price in the domestic market once again will fall to Rs. 198 per kg in near future, when the NR prices were at Rs. 212 per kg.

Read lot more in Rubber4U – 15th November 2011 issue

Proposed tax hike may impact the industry

Natural rubber prices in the international and domestic market continued to decline as uncertain global macro economic conditions raised concerns over the demand. Compared to the international market, losses in the Indian markets were limited probably due to weakening rupee which is limiting imports.

India Government is likely to impose additional tax diesel cars which may affect the country’s automobile and natural rubber industries adversely. If the proposed tax comes into effect, the passenger car sales may show lower growth rate, which in turn may affect rubber industries. Demand for the finished product and in turn for raw material may decrease. Decision for increasing the tax is to raise the much needed revenue for the country. All efforts are being made to ensure the fiscal deficit target of 4.6% of GDP is met. The Finance Minister is expected to take the decision after assessing the indirect tax collection figures for October 2011.

The latest price of RSS3 grade natural rubber in the international market at Bangkok closed at Rs 194.82 per kg., SMR-20 closed at 186.77 a kg at Kuala Lumpur and on the other hand domestic RSS4 grade closed at Rs. 211.50 a kg at Kottayam. At Tokyo Commodity Exchange futures prices for November delivery closed at ¥291.4 a kg and ¥296.4 a kg for March 2012 contract.

Weak sentiments exist in the market, a pull back towards Rs. 215 per kg in the domestic market had been seen and once again a fall to Rs. 198 per kg may be possible in near future.


Read lot more in Rubber4U – 15th November 2011 issue

Increasing demand may push the price up

Today natural rubber prices in Malaysia, Thailand and Tokyo increased, due to better economic data from the U.S. On 1^st October, we have forecasted that if Indian Stock Market opens in red on 3^rd October, one can expect domestic natural rubber prices moving towards north. In the next week increasing demand may push the natural rubber prices up.

After agreeing to set a benchmark price, Thailand has set a minimum natural rubber price of $3.86 per kg and the country is considering cutting down older rubber trees in a move to reduce production and improve price.

Today, the price of RSS3 grade natural rubber in the international market at Bangkok closed at Rs 203.91 per kg., SMR-20 closed at 204.71 a kg at Kuala Lumpur and on the other hand domestic RSS4 grade closed at Rs. 211 a kg at Kottayam. At the National Multi Commodity Exchange (NMCE), rubber future prices for October delivery closed at Rs 214.47 per kg and at Rs. 215.51 per kg for March 2012 delivery. At Tokyo Commodity Exchange futures prices for October delivery closed at 308.10 yen/kg and 315.20 yen/kg for March 2012 contract.

Read lot more in Rubber4U – 15th October 2011 issue

Rubber price scenario

The fall in the natural rubber prices in the international market is due to high degree of uncertainty about the European situation and its effects on economic growth. There were anxious market moves in the U.S., and is expected to see similar moves in coming days also. The euro is most likely to continue its trend deterioration until it gets really bad, forcing a resolution to come.

Most probably on Monday, Indian Stock Market may open in red and if the day continues in red then one can expect domestic NR prices moving towards north. Today, at the National Multi Commodity Exchange (NMCE), rubber future prices for October delivery closed at Rs 208.82 per kg and for November, December, January & February closed at Rs. 205.04. Rs. 206.36, Rs. 207.06 and Rs. 209 per kg, respectively.

If the above scenario happens, then there is a possibility of increase in import of natural rubber. On the other hand India’s Commerce & Industry Minister said that government may announce a relief package for exporters before Diwali. The need for the package is important as the country’s economic growth is seen moderating in the wake of turmoil in developed nations of the world.

Read lot more in Rubber4U – 15th October 2011 issue

Rubber price goes down

The fall in the natural rubber prices in domestic market is because of speculation as well as international future markets and slowdown in demand. Today the price of RSS3 grade natural rubber in the international market at Bangkok closed at Rs 207.33 per kg., SMR-20 closed at 198.75 a kg at Kuala Lumpur and on the other hand domestic RSS4 grade closed at Rs. 208.50 a kg at Kottayam. At the National Multi Commodity Exchange (NMCE), rubber future prices for October delivery closed at Rs 209.83 per kg. At Tokyo Commodity Exchange futures prices for October delivery closed at 290 yen/kg.

In the first quarter of the current fiscal, NR imports doubled to 38,233 tonnes from 19,118 tonnes during the same quarter of previous fiscal. Now we have to wait and see what will the natural rubber import situation in the 3^rd quarter.

Read lot more in Rubber4U – 1st October 2011 issue

Rubber producers urged to cut exports & TOCOM to narrow circuit breaker

Tokyo Commodity Exchange (TOCOM), will halve the price width of its circuit-breaker for rubber futures from 3^rd October 2011 to help limit market volatility. When a circuit breaker is triggered, TOCOM suspends trading for five minutes before the trading band is widened, helping to moderate any sharp accelerations in price moments.

Currently, the circuit-breaker is hit when prices move up or down by 10 yen. The new circuit-breaker will be hit after price rises or falls of 5 yen from the night session of 30th September, which is counted as part of the next trading day’s session. The circuit-breaker would kick in three times up to a maximum price move of 20 yen, at which point trading would effectively halt.

Tokyo rubber futures, which set the tone for physical prices, rebounded today after tumbling 12% to a one-year low around 303 yen a kg yesterday, hit by a global sell-off in risk assets. The International Rubber Consortium (IRCo) has urged Thailand, Indonesia and Malaysia to curb exports if rubber prices fall further in the wake of a global economic slowdown.

We’ve advised the three countries to slow exports if the rubber price falls to a certain level that we can’t accept. We are waiting for responses from the three countries. We can’t disclose the price level. We call it our defence price. If the price reaches the threshold, we have to react, said Yium Tavarolit, IRCo’s chief secretary.

Read lot more in Rubber4U – 1st October 2011 issue

Demand outlook worsens

Oil prices have been on a very gradual downward trend since April and have been brought down by the continuous poor economic reports, from the US, Europe and China. Oil prices fell sharply fearing that global economy is headed for a double dip recession and wave of economic crisis will significantly reduce global energy demand.

Auto industry has slowed down due to high fuel cost and hike in the interest rates. Rubber prices have also soared, affecting production of tyres. The increase in the raw material prices has affected the rubber industry. Removal of anti-dumping duty on Chinese tyres has damaged competitive environment in Indian tyre industry. There is uncertainty in the industry because of the competition posed by the Chinese tyre companies. Chinese tyres come 20% cheaper compared to Indian tyres. In the coming months, tyre companies will struggle to hold on their own and many of them may see red in their balance sheets.

While addressing the media persons at the 59th AGM of All India Rubber Industries Association at Chennai, Rubber Board Chairperson, Sheela Thomas, said rubber production is set to increase to 9.02 lakh tonnes and the consumption will be over 9.77 lakh tonnes during the year. The industry believes the estimates of shortfall by the board are conservative, and the board had launched a separate survey to assess the natural rubber stocks. The findings of the sample survey is expected to be out in October.

The Rubber Board is projecting a 75,000 tonnes shortfall in availability of natural rubber this year. The President of All India Rubber Industries Association, Vinod Simon, said securing the natural rubber is the single largest concern for the industry. While long term initiatives could include expansion of plantation areas. Government needs to be supportive on short term measures like facilitating imports. The prevailing import duties need to be brought down as costs are increasing and the shortfall cannot be bridged at current rates.

The price of RSS3 grade natural rubber in the international market at Bangkok today closed at Rs 219.74 per kg., SMR-20 closed at 216.50 a kg at Kuala Lumpur and on the other hand domestic RSS4 grade closed at Rs. 211 a kg at Kottayam. At the National Multi Commodity Exchange (NMCE), rubber future prices for October delivery closed at Rs 212.07 per kg. At Tokyo Commodity Exchange futures prices for October delivery closed at 297.70 yen/kg.

Read lot more in Rubber4U – 1st October 2011 issue

AIRIA Office Bearers for the year 2011-12

Petrol gets dearer and the interest ……

Crude oil import gets costlier with the drop in rupee value. India has been increasing fuel prices in order to ease its fiscal burden. Petrol prices have gone up once again, which is the second hike by the government in four months. After the hike the petrol would cost Rs. 66.84 a litre in Delhi, Rs. 71.62 in Mumbai, Rs. 71.15 in Kolkata, Rs. 70.64 in Chennai and Rs. 74.50 in Bangalore.

Inflation in India rose to 9.78% for August, its highest in 13 months, adding to expectations that the Reserve Bank of India (RBI) will raise interest rates on 16^th September, for the 12th time since March 2010. The hike in petrol prices and also hike in interest rates will impact the auto sector. The interest rate on automobile loans is expected move up, resulting in weak demand for the vehicles. The sluggish growth in auto sales will impact rubber goods manufacturing industry also.

Read lot more in Rubber4U – 1st October 2011 issue

List of Tyres allowed to import

Tyres allowed to Import

Rubber Cess hiked to Rs. 2/-

Rubber Cess

US faces crisis

While proposing to pull the United States out of a “national crisis, President Barack Obama pressed Congress to act urgently to approve a jobs package of tax cuts and government spending. Obama wants Congress to pass his “American Jobs Act” by the end of this year. But that may be hard to achieve with politicians already focusing on the presidential and congressional elections in November 2012. If Obama can push through his plan, it might provide a jolt to an economy that has stalled and give companies confidence that if they invest and hire there will be customers for their products and services.

Union Finance Minister Pranab Mukherjee said the information and technology (IT) industry might be affected due to the current economic crisis in the US, but cautioned that there was no need to press the panic button yet. It is too premature to say what the final shape of the downgrading of the US economy would be.

Domestic demand is the main strength of the Indian economy, which other advanced economies do not have. During the global slowdown in 2008, India managed 6.8% growth despite negative growth in exports for 11 consecutive months and nearly 60% of India’s export destinations were Japan, EU and USA. The fiscal crisis in the US and Europe could have some impact on exports, though it was yet to find out how much the Indian export industry has benefited from exporting to new locations in the past two years.

Read lot more in Rubber4U – 15th September 2011 issue

Tyres which can be imported by OEMs

A Committee was constituted to finalize the list of tyres not manufactured domestically and to be imported by the OEMs for selling replacement market through their authorized dealers.

The committee has finalized a list of 316 sizes and types of tyres which are not manufactured domestically and to be imported by the OEMs. This list is inclusive of 103 sizes and types of tyres as circulated vide Department’s Office Memorandum dated 13.05.2011.

Read lot more in Rubber4U – 15th September 2011 issue

Published on 10th September 2011

Fresh fears of recession

Financial markets have wrestled for several days with fears that a new recession in the US is in the offing. Today stock markets plummeted amid signs of a possible recession and worries over the health of Europe's banks. WTI Crude Oil price were trading at $80.39 and Brent Crude Oil at $106.08 a barrel at IST 4.10 p.m. According to a survey manufacturing in the mid-Atlantic region contracted in August by the most in more than two years.

The price of RSS3 grade natural rubber in the international market at Bangkok today closed at Rs 211.07 per kg., SMR-20 closed at 205.54 a kg at Kuala Lumpur and on the other hand domestic RSS4 grade closed at Rs.198.50 a kg at Kottayam.

The future markets both domestic and international also have been down, which have further affected the domestic spot prices. At the National Multi Commodity Exchange (NMCE), rubber future prices for September delivery closed at Rs 199.11 per kg. At Tokyo Commodity Exchange futures prices for September delivery closed at 348 yen/kg.

Read lot more in Rubber4U – 1st September 2011 issue

Definitive anti-dumping duty goes

The three-member Bench of the Customs, Excise and Service Tax Appellate Tribunal has set aside the levy of definitive anti-dumping duty on truck/bus radial tyres and tubes imported from China and Thailand. The verdict would hopefully provide relief to radial tyre users in the country.

All India Tyre Dealers' Federation (AITDF) hailed the Tribunal decision. In a statement AITDF said that ever since the anti-dumping duty of $32 to $90 per tyre was clamped, import of truck/bus radials had crashed in the replacement market that relies heavily on Chinese and Thai products.

Domestic tyre prices had soared in the last 18 months, since January, though natural rubber prices had come down significantly from the peak of Rs 243 a kg on 5^th April to Rs 203.50 a kg. The Federation hoped that in the coming weeks the import of truck/bus radials would gain momentum to revert to the pre-anti-dumping duty levels.

Read lot more in Rubber4U – 15th August 2011 issue

Boon for India

Oil prices have come down by 15% from its recent highs and it is expected that other commodities too will follow the same trend. Standard & Poor’s (S&P) has downgraded US Economy’s Long-Term Sovereign Credit Rating to AA+ from AAA with a negative outlook, which is good for India, as it will help the Reserve Bank of India in its battle against inflation.

If the US goes into recession, it is expected that Brent prices may come down to $80/bbl, which will have a positive impact on India’s current account. Not only will this help battle inflation, it will also keep fiscal deficit in check.

While the short-term impact would be more obvious in terms of market uncertainties (Stock market will open in 300 negative on 9^th August), the long term impact may be more prolonged. But uncertain global environment could however depress India’s exposure to global markets, which in turn may have an effect on India’s GDP growth.

Many experts believe that India should be able to withstand any possible problems following S&P’s US downgrade. However, S&P has warned that even as there is no immediate impact on the Asia-Pacific sovereign ratings, the potential longer-term consequences of a weaker financing environment, slower growth and higher risk aversion are the negative factors.

Read lot more in Rubber4U – 15th August 2011 issue

Can NR import rise?

In the current scenario, there are concerns that India’s natural rubber consumption growth could slow in 2011-12 as auto sales are falling, hitting tyre demand from original equipment manufacturers (OEMs), but there is demand from the tyre replacement segment which will drive growth.

When it is expected that domestic prices most of the year is likely to remain lower than international prices because of the change in duties, then how it is possible that there will be a major rise in import. If import has to increase, then the domestic prices has to go above the international prices that too with a minimum gap of Rs 20 per kg., then only import will be viable. One more important thing is the stock level, which is at 2,47,442 tonnes as of June, compared with 1,80,697 tonne a year ago.

The growers are holding stocks in the hope of higher prices in future, which in turn has created short supply in the market, hence imports are taking place and also due to concessional duty import.

It is expected that India’s 2011-12 natural rubber production will rise due to good monsoon in the southern state of Kerala.

Read lot more in Rubber4U – 1st August 2011 issue

Rubber4U

1st August 2011 issue

Hike in interest rate may impact rubber

The hike in interest rates will impact the auto sector. The interest rate on automobile loans is expected move up, resulting in weak demand for the vehicles. The sluggish growth in auto sales will impact tyre industry, which accounts for 65% of natural rubber demand. The natural rubber production season is expected to begin from mid August and Kerala accounts for 90% of the natural rubber production and the growers, who are already under fears of an imminent price fall owing to the government decision, may suffer further damage. But some dealers are of view that the prices may not see any decline immediately as producers would have to hold back stocks to limit any sharp fall.

Read lot more in Rubber4U – 1st August 2011 issue

Rubber4U Anniversary Issue

15th July 2011

Safeguard duty on key chemical

Rubber industry will take a hit as the government deciding to impose safeguard duties on a key chemical (PX-13), aimed at protecting the domestic industry against a surge in imports causing losses. As per a notification, the duties will be levied at 30% of the imported value in the first year and 25% in the second year.

In a complaint filed by NOCIL to the Director General of Safeguards, stated that given the surge in imports, the domestic industry may not find market for additional capacities that are coming up. The user industry, which includes major tyre manufacturers, would now have to pay a higher import duty on the chemical. ATMA is apprehensive that the duty may affect input prices in the future.

Read lot more in Rubber4U – 1st August 2011 issue

Rubber Board conducting survey

Rubber Board of India is conducting a statistical sample survey of rubber holdings in Kerala. The survey is meant to assess the age of plantations, production and stock of rubber, maintenance of plantations, growers’ response to the board’s schemes and the activities of Rubber Producers’ Societies.

Rubber Board chairperson - Sheela Thomas has requested farmers to co-operate with the survey and also to give correct statistical data, considering its importance in the future planning and formulation of the schemes.

The aim of the survey is to update the statistics and to collect inputs for the formulation of 12th Five Year Plan proposals of the Rubber Board.

The survey is targeting about ten thousand holdings in different regions of Kerala.

Read lot more in Rubber4U – 1st August 2011 issue

Rubber Forecast

Rubber Forecast 2011-12

40,000 tonnes of NR import allowed at 7.5% duty

Indian government has permitted imports of 40,000 tonnes of natural rubber at a concessional duty of 7.5% for the current fiscal. This is in line with the one allowed last fiscal. The move to allow imports at a lower duty follows demand from the user industry, to allow import of two lakh tonnes duty-free.

The import will meet consumers' need for just 15 days, going by the consumption of 80,500 tonnes in June. Growers, however, are totally opposed to imports, as it may suppress domestic prices.

Since 1^st April 2011, the Customs duty on natural rubber has been fixed at 20% or Rs.20 a kg, whichever is lower. In the first quarter of the current fiscal, NR imports doubled to 38,233 tonnes from 19,118 tonnes during the same period of previous fiscal.

Read lot more in Rubber4U – 1st August 2011 issue

India to head IRSG for 2 years

India has been elected as the new Chairman of the International Rubber Study Group. Mrs. Sheela Thomas, Chairperson of the Indian Rubber Board, will officiate as the Chairman of International Rubber Study Group (IRSG), for the next two years. The decision was made unanimously in the meeting of the Heads of Delegations (HOD) held on 14th July 2011 at Singapore. EU was elected as the new Vice Chairman for the next two years. Members opined that India, being both a producer and a consumer of rubber, would be in a good position to protect the interests of both producers and consumers in IRSG.

While presiding over the meeting of the HOD, the new Chairman of IRSG, Mrs. Sheela Thomas, highlighted the need for increasing the coordination among ANRPC, IRSG and IRRDB. There should not be duplication of work among the organisations and the synergy of expertise of the three organisations would be appropriately utilised for the benefit of rubber industry.

Read lot more in Rubber4U – 1st August 2011 issue

Rubber4U

1st July 2011 issue

Rubber price at Rs. 207 per kg.

Natural rubber prices today fell by Rs 3 to hit a nearly three month low of Rs 207 per kg in line with the fall in prices in the global markets. On 25th June, natural rubber prices was at Rs 216 per kg at Kottayam. (Since 1st January 2011, the lowest price was on 14th March at Rs. 185 per kg.)

The rate of RSS3 grade natural rubber in the international market at Bangkok today fell by Rs 1.97 to Rs 207.49 per kg as compared to Rs 212.63 per kg on 24th June.

The future markets both domestic and international also have been down, which have further affected the domestic spot prices. At the National Multi Commodity Exchange (NMCE), rubber future prices for July delivery closed at Rs 206.73 per kg. At Tokyo Commodity Exchange futures prices for July delivery ruling at 358 yen (Rs 199.47).

Read lot more in Rubber4U – 1st July 2011 issue

Rubber prices likely to be lower next week

Once again domestic natural rubber price is above the international prices. Today, price of natural rubber (RSS-4 grade) in the domestic market (at Kottayam) closed at Rs 217 a kg and on the other hand the international price of RSS3 grade at Bangkok closed at 215.26 a kg.

It is expected that rubber prices to decline further in the coming days and one can expect to see the price to touch Rs. 206 a kg in the domestic market and in the international market there is an indication of upward trend and probable will touch Rs. 222 a kg.

Read lot more in Rubber4U – 1st July 2011 issue

Rubber4U

15th June 2011

Rubber prices may rise

The Society of Indian Automobile Manufacturers (SIAM) has trimmed its annual growth forecast for passenger cars from 16-18% to 14-16%. Automobile component manufacturers are raising the prices on account of high input costs, which in turn forces the automobile manufacturers further raise the prices to avoid a squeeze on margins. Increased borrowing rates and surging fuel prices would further drag the industry momentum.

With the global economy slowing down and OPEC mulling a production quota hike, crude oil prices would come down in the coming months. This would also bring down the prices of synthetic rubber and would replace natural rubber in a limited way curbing the natural rubber demand.

Rubber Board had projected domestic consumption of natural rubber to the tune of 9.77 lakh tonnes mainly on automobile demand. But with sluggish sales in the offing, it is highly unlikely that there would be such a huge demand. This means rubber inventories in India would climb.

Natural rubber prices have seen a steep decline in the past few weeks due to better production and rising imports. However, prices are expected to recover in the coming days as production is about to enter a lean phase with the onset of monsoon.

As on 6th June, the prices of natural rubber (RSS4 grade) closed at Rs 226.50 per kg and are likely to trade between Rs. 220 and Rs 238 per kg, till June end.

Read lot more in Rubber4U – 15th June 2011 issue

Rubber4U

1st June 2011

Domestic NR price above the international price

According to the experts, the recent fall of rubber prices in the international markets are expected to pick up at least by the end of May. The reason for the dip in prices has been the falling rubber prices in the global market, especially those supplied by Thailand.

Today, price of natural rubber (RSS-4 grade) in the domestic market closed at Rs 232 a kg compared to yesterdays Rs. 230 a kg. As the global market had shown signs of correction, RSS3 grade price at Bangkok closed at 228.75 a kg.

Read lot more in Rubber4U – 15th May 2011 issue

During the week rubber likely to trade between Rs. 232 & Rs. 221 a kg.

Rubber declined after the China's manufacturing index fell more than economists forecasted. Lack of demand especially from China due to its high level of rubber inventory is likely to drag prices down during the week. Rising supply from major rubber producing countries could also put pressure on prices.

The unusual rainfall in Kerala has brought in a slight correction in prices as rubber production has gathered momentum as higher rubber prices forced growers to re-start tapping well in advance of monsoon. It is expected that rubber prices to decline further in the coming days and will be trading between Rs. 232 to Rs. 221 a kg, as tapping will continue till end of May.

Read lot more in Rubber4U – 15th May 2011 issue

NR in the mode of correction

The natural rubber price is now in a correction mode due to increased production. Both, the domestic and international prices of the commodity have fallen during the week due to fresh developments in production and supply of the natural rubber. The unusual rainfall in Kerala has brought in a slight correction in prices as tapping has gathered momentum. Today, price of natural rubber (RSS-4 grade) fell by Rs 3 a kg to Rs. 230 a kg, as compared to yesterdays Rs. 233 a kg.

As the global market had shown signs of correction, it is expected that there will be sharp increase in China’s import.

Read lot more in Rubber4U – 15th May 2011 issue

Trend for those yet to come

Automotive component makers are taking positions in India’s auto industry, which is growing at about 10% a year and would grow by 10 to 12% a year for the next two years. During the month two deals were announced, Germany’s Continental acquired the tyre business of Modi Rubber and US based Dana Corporation said it had agreed to buy the drive-head unit of Axles India, a joint venture between Dana and two Indian companies – Sundaram Finance and Wheels India. The deal is expected to close in the second half of the year.

Overseas interest in India’s auto market could be driven by strong consumer fundamentals as well as its existing low car market penetration of 12 cars per 1,000 people as compared to China at 21 and US at 500. The future buyers could show interest in India’s low-cost manufacturing base from where they could export their products to South East Asian region.

On the other hand the rubber industry has proposed to the government to provide a one time subsidy of Rs 1 lakh per hectare to small farmers for a period of three years for planting rubber trees, in the 12th Five-Year Plan (2012-17) to boost natural rubber output. At present the government is providing a subsidy of Rs 19,500 per hectare on rubber cultivation in the traditional areas and Rs 30,000 per hectare in non-traditional areas. The rubber producers said that hefty subsidy would help increase rubber production in newer areas like the northeastern states.

The rubber industry has also suggested the government to expand the country's rubber output by following the Chinese model of acquiring land in other countries for plantation, to meet its growing natural rubber demand.

Read lot more in Rubber4U – 1st May 2011 issue

SBR price may surge on tighty supply

Styrene Butadiene Rubber (SBR) prices have risen above $4,000/tonne and are likely to remain firm in the second quarter because of tight supply, said an India based tyre producer.

In Japan, a number of SBR plants have shut operations or cut production in the wake of the massive 9.0 magnitude earthquake and tsunami that struck on 11th March 2011. The shortfall in SBR supply in Japan has prompted other Asian producers to step in to provide the material, shaving the volumes available for India and on the other hand to meet the shortfall in the Japanese market, Korean SBR producers have reduced their volume offers to India.

According an India based trader, SBR market is turning more bullish as there is no spot cargo from Europe because of the tight butadiene supply in Europe.

Read lot more in Rubber4U – 1st May 2011 issue

Rubber prices likely to remain low during the week

On 18th April 2011, the domestic NR price (RSS4 grade) closed at Rs. 239 per kg at Kottayam and Rs. 261.94 per kg (RSS3 grade) at Bangkok, on weak sentiment. Natural rubber prices may fall due to fall in rates in global physical and future markets.

According to Rubber Board of India, natural rubber production in the country rose to 8,61,950 tonnes in 2010-11, an increase of 3.67% against 8,31,400 tonnes in 2009-10.

The board has projected NR production at 9,02,000 tonnes and consumption at 9,77,000 tonnes during 2011-12.

Read lot more in Rubber4U – 15th April 2011 issue

Consuming industry wants random inspection of imported NR to be stopped

All India Rubber Industries Association (AIRIA) and Automotive Tyre Manufacturers Association (ATMA), want the Rubber Board to stop random inspection of imported natural rubber.

In a communication to the Union Government, the natural rubber consuming industries have said that due to high NR prices, rubber consuming companies import natural rubber in quantities just sufficient to meet the current requirements, the practice being part of prudent stock management. But they pointed out that any delay in clearance of imported consignments would disrupt the entire production process and could lead to delay in their export commitments. However, the consuming industries were also quick to point out that the rejection rate of imported rubber on quality grounds by Rubber Board officials was less than 1%.

The provision of random inspection of imported natural rubber by the Rubber Board was introduced in December 2004 to check if the imported rubber met the quality requirements.

The decision of inspection of imports should be left to the importer, because industries imports natural rubber at high prices, hence industries can not take the risk of buying natural rubber which does not meet the quality requirements as that would be a drain on their financial resources.

Natural rubber is a raw material and not an item for human consumption. It is a raw material which has to go through a long process of manufacturing to make end products. As the user industries are extra cautious that the imported rubber is of high quality. Hence, it is important that quality standards are followed for the finished products and not for the raw materials.

Read lot more in Rubber4U – 15th April 2011 issue

Rubber at all time high & import may be cheaper

Natural rubber prices have been rising in the domestic and international markets due to news of floods and mudslides in Thailand, which will affect the rubber supply in the markets. Natural rubber today jumped to a all time high price and closed at Rs 243 per kg. at Kottayam, largely on the back of strong global cues.

Kerala has been witnessing summer rains which indicates that tapping would continue and more rubber would be produced, but the farmers are not bringing all their produce to the markets in anticipation that the prices would rise further.

The applicable import duty of Rs 20 a kg or 20%, whichever is lower, will lead to significant cost savings for the domestic rubber goods manufacturing industries and also would help in improving the availability of raw material in the market. The rubber (RSS3 grade) price at Bangkok closed at 266.13 a kg.

Read lot more in Rubber4U – 15th April 2011 issue

Rubber price at its peak once again

Rubber prices made a glorious rebound on strong demand and sharp gains in domestic and international markets. According to industry experts, prices are set to break current records to create another historic high shortly. Rubber grade RSS4 closed at Rs 240/- a kg. at Kottayam and at Bangkok RSS3 grade closed at 258.08 a kg.

Increase in oil prices has lead to rise in the cost of synthetic rubber, substitute of natural rubber. The floods in Thailand, the world’s largest natural rubber producer have disrupted output over the past week. As on 1st April, natural rubber inventories monitored by the Shanghai Futures Exchange fell for an eighth week, losing 5,587 tonnes to 27,611 tonnes, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin.

Read lot more in Rubber4U – 15th April 2011 issue

Scheme for faster clearance

Exporters and importers may soon be allowed faster clearances for their goods, with the finance ministry planning to start a scheme that would simplify customs procedures and reduce intervention.

In December 2010, the government had released a draft paper on Authorised Economic Operator (AEO) for public comments. “We have received comments and will finalise the guidelines shortly. We have to decide the benefits in terms of faster clearance and less examination”, said a finance ministry official.

The finance ministry is planning to roll out the scheme in phases and may begin by taking up pilot projects with six exporters, having a sound track record, good accounting system, financially solvent and a secure company. Initially, it will be voluntary since the revenue department feels it would not be easy for every business to meet the stringent norms, which have high compliance costs. Once the Authorised Economic Operator (AEO) status is granted, businesses will have a recognised quality mark which will indicate their secure role in the international supply chain and that their customs procedures are efficient and compliant. This may particularly benefit small businesses that account for the majority of importers and exporters.

Read lot more in Rubber4U – 15th April 2011 issue

Cheque clearing becomes costlier

High value and outstation Cheque payment become costlier from 1st April 2011 onwards, as Reserve Bank of India (RBI) has allowed banks to levy higher service charges for their clearing. Previously, RBI did not allow banks to charge more than Rs. 150 per cheque for speed clearing of cheques worth over Rs. 1 lakh and there was no charges for value up to Rs. 1 lakh.

RBI has decided to lower the service charge for outstation cheques up to Rs. 5,000, by allowing a levy of Rs. 25, as against Rs. 50. The outstation cheques between Rs. 5,000 and Rs. 10,000 would continue to attract a fee of Rs. 50, while cheques between Rs. 10,000 and Rs. 1 lakh would also continue to be levied a charge of Rs. 100.

For normal local clearing drawee bank can charge up to Rs. 1.50 per cheque from 1st April, as against Rs. 1 previously.

Read lot more in Rubber4U – 15th April 2011 issue

Strong demand but tight supply

International Rubber Study Group has predicted strong global demand for tyres with a sustained growth and strong demand for new vehicles. The demand will originate from China and to a lesser extend India. The years through to 2020 will be a period of opportunity for tyre makers and the replacement market. With around 70% of natural rubber and 50% of synthetic rubber going into tyre production, global rubber consumption is set to follow increased tyre manufacturing activity.

According to Association of Natural Rubber Producing Countries, global natural rubber production is forecast to reach 10.06 million tonnes in 2011, up from a previous estimate of 9.7 million tonnes. The supply growth this year comes from expansion in yielding area by an expected 203,000 hectares and improvement in yield. About 114,500 hectares of trees planted in 2004 and a portion of 173,000 hectares planted in 2005 are expected to have opened for tapping.

According to Association of Natural Rubber Producing Countries, natural rubber inventories will remain tight around the world. Prices of rubber have dropped more than 12% since striking a record above $6 per kg in February, as economic concerns triggered by the unrest in the Middle East and worries about the impact of earthquake and tsunami in Japan. However, the momentum of recovery has eased towards the end of March caused by a bearish demand outlook.

Read lot more in Rubber4U – 1st April 2011 issue

Invition of inputs for formulation of Rubber Board Schemes for 12th Five Year Plan

Rubber Board has invited suggestions from all the stakeholders for formulating the Board’s schemes for the 12th Five Year Plan to be implemented from the year 2012-13. Internationally renowned agricultural scientist and Member of Parliament Dr. M.S. Swaminathan would chair the National Committee which has been constituted for the evaluation. The committee comprising experts from different disciplines would critically look into all the schemes now being implemented in the fields of production, processing and marketing of natural rubber and also research in rubber.

Sheela Thomas, Chairperson of Rubber Board said that an evaluation of these schemes would be conducted so as to generate inputs for the formulation of 12th Plan schemes. In order to give an opportunity for all sections of the public to have their say in plan formulation, the Board has scheduled a series of consultations with various segments of rubber industry stakeholders. The observations and suggestions received from the stakeholders would be considered with seriousness while formulating the 12th Plan proposals of the Board, subject to the guidelines and priorities set up by India Government and Planning Commission.

The development schemes of the Rubber Board are part of Five Year Plans implemented by the India government.

Read lot more in Rubber4U – 1st April 2011 issue

Industry seek lower import duty on latex

Latex is the first stage output of the rubber tree and is processed to obtain natural rubber. Currently import duty on latex stands at 70% even as that on the finished product is less than 7.5%. Latex prices have surged from around Rs 55 a kg in January 2009 to Rs 117 at present, after having peaked to Rs 148. While natural rubber is attracting duty at Rs 20 a kg at current prices, latex is attracting duty around Rs 82 a kg.

The growing demand and prices has prompted All India Rubber Industries Association to write to the Finance Ministry pointing out that the increase in price of latex is threatening the very survival of the latex consuming industry, which comprises mainly of small units. While considering the reduction in customs duty on natural rubber to 7.5% for a limited quantity till 31st March 2011 and subsequently a cap of Rs 20 per kg, the Government should have considered a reduction in customs duty on rubber latex as well.

It is surprising that the import duty on latex has been gradually enhanced from 25% in 1999-2000 to 70%, while that on finished goods has been reduced from 40% to less than 7.5% during the same period. The facilitated import of finished goods is antithetical to the Government's avowed policy of enhancing domestic value addition. A large number of the small and medium scale units are not able to pass the price hike to the consumers, said AIRIA President - Vinod Simon.

Mean while, International Rubber Consortium acting Chief Executive Yium Tavarolit said that IRCo, a consortium of rubber producting countries including Thailand, Indonesia and Malaysia, which collectively account for some 70% of global natural rubber output, will likely convene a meeting with both private and public stakeholders to mull price stabilization measures this week. We will propose that exporters not export rubber at certain price levels that are below market fundamentals.

Read lot more in Rubber4U – 1st April 2011 issue

NR prices bounce back and narrows the gap

The natural rubber market is expected to rebound due to favourable fundamentals, such as strong economic growth of China and India coupled with anticipated higher average oil prices in 2010. Natural rubber prices today rose by Rs 6 to Rs 221 per kg in the domestic markets and in the international market at Bangkok it rose by almost Rs 19 to Rs 227.37 per kg today as against Rs 208.51 yesterday.

The prices in the spot markets has risen on back of price adjustment in the major international spot and future markets. A higher level of NR price is expected especially in view of tight global supply and declining stocks. There could be minor adjustments in the NR prices in the coming days.

It is also expected that Thailand, Indonesia and Malaysia would probably delay exports to counter a price slump.

Read lot more in Rubber4U – 1st April 2011 issue

Rubber up by Rs 14/- a kg.

World natural rubber markets remained volatile in the face of the 11th March 2011 earthquake, tsunami and nuclear plant disaster that struck northern Japan. After a fall in prices, today natural prices rose by Rs 14 to Rs 201 per kg at Kottayam, due to slight recovery in global markets. Natural rubber prices at Bangkok marginally gain by Rs 3.24 to Rs 204.62.

Domestic natural rubber price recovered due to marginal recovery in the Tokyo Commodity Exchange (TOCOM). But at this moment nobody can state for sure that the recovery in rubber markets would continue as international markets are still reeling under pressure of the shutdown of almost whole of the economy in Japan. The disruption is temporary and when the world's third-largest economy starts rebuilding again the demand for everything would zoom.

Japan accounts for 7% of the global demand for natural rubber. A few plants which have to be shut down, due to power supply stoppage and safety concerns, will resume production on restoration of electricity supply. The closure these plants for a few days cannot impact on the commodity’s global demand in a significant way. The disaster is unlikely to have a noticeable impact on global economy, as Japan has not been a driver of the global recovery from the economic meltdown in 2008.

Read lot more in Rubber4U – 1st April 2011 issue

Natural rubber prices at Rs. 185/- per kg.

Natural rubber prices on 14th March reached at Rs. 185 a kg, a fall of around Rs. 56 from all time high, on the back of declining rates in the international markets. The price of rubber in the domestic market was Rs 230 per kg on 5th March, with in seven trading session the price has fallen to Rs. 185.

The prices of natural rubber have fallen in the major international physical markets like Malaysia, which affected prices in the domestic market. Natural rubber in the international market at Bangkok was being sold at Rs 223.74 per kg on 14th March, against Rs 267.53 per kg as on 7th March.

China was buying less rubber due to fears of more unrest in Libya, which could affect crude prices further and may affect automobile sales. Prices have also been affected due to the financial year coming to an end, as business houses during this time carry minimal stocks. Besides that farmers are also bringing some produce in the markets, which too had partially affected the prices.

Read lot more in Rubber4U – 15th March 2011 issue

Negative impact on crude oil

The earthquake measuring 8.9 on the richter scale struck about 382 kilometres northeast of Tokyo, accompanying tsunami. This is the seventh largest recorded earthquake and a horrific event. Much of Japan is shutdown - transportation system is not running and people are stranded. Power plants have been shut down and there is an emergency nuclear situation as technicians struggle to pump water to cool on of the nuclear reactors. One refinery is on fire and others may be shut down. At the moment the situation is a mess and the impact of the earthquake is still a bit of a fog as things get sorted out.

Japan at a standstill and refineries shut down, the demand for crude oil is going to decline. Japan consumes about 4.4 million barrels per day of crude oil with about 99% of it imported. At least for the short term Japan is going to import less crude oil. On the other hand to the extent that enough refinery damage has occurred Japan will likely offset some for the crude oil import decline with imports of refined products. How much demand Japan will have for imported refined products in the short to medium term will be a direct function as to how quickly the country gets back to a more normal way of life as well as how quickly the refining system can get back on stream. At the moment it does not look like Japan will be experiencing any crude oil shortages rather if they do experience a shortage it will be in refined products. From an oil pricing perspective the situation in Japan is likely to result in a negative impact on crude oil prices and a positive for refined products.

Read lot more in Rubber4U – 15th March 2011 issue

NR down by Rs 6 to Rs 212

Natural rubber (NR) prices fell by Rs 6 to Rs 212 per kg on 11th March, in the domestic market due to high volatility in the international physical markets and low inventories. The prices of NR in domestic physical markets follow the international market trends, which have witnessed heavy fall, as the data indicated a slowdown in the US and Chinese economies. Concern grew that raw-material demand may weaken, rubber was sold heavily as its consumption depends largely on Chinese demand.

Rubber prices fell to the lowest level in almost three months after an 8.9 magnitude earthquake struck Japan, spurring concerns the disaster may hurt the Japan’s economy and weaken demand. The August-delivery contract on the Tokyo Commodity Exchange plunged to 383.5 yen a kg, the lowest level for the most active contract since 13th December 2010.

The physical price of Thai rubber fell for eighth day amid concerns that tyre demand may decline as overseas buyers delay purchases waiting for prices to weaken further.

The prices of natural rubber at the Bangkok spot market witnessed a fall of almost Rs 22 to Rs 241.26 per kg today as against Rs 263.39 per kg on 8th March.

The sharp fall in the natural rubber prices in domestic market is because of speculation as well as international future markets and slowdown in consumption in China. Prices have also been affected due to the financial year coming to an end, during this time manufacturing sector carry minimal stocks.

Read lot more in Rubber4U – 15th March 2011 issue

The price of RSS4 grade closed at Rs. 222/- per kg

In the domestic market natural rubber prices fell by Rs 5 to Rs 222 per kg on the back of declining rates in the international markets. The rubber prices slumped to the lowest level in almost two months after data showed car sales in China fell for the first time since September 2009, after fuel prices rose and the government ended incentives supporting vehicle sales. Chinese car sales may not grow as much as earlier expected, given rising fuel costs and the nation’s monetary tightening. China raised the sales tax rate on small cars this year to 10% from 7.5%. It is believed that market sentiment is changing due to rising gas prices, higher borrowing costs and overall tightening in the economy. This situation has created concern about the demand for tyres.

The price of NR (RSS4 grade) in the domestic market was at Rs 230 per kg on 5th March and in the international market at Bangkok the price of RSS3 grade closed at Rs 263.39 per kg today as against Rs 270.10 per kg on 4th March 2011.

Chinese buyers have delayed purchases, waiting for prices to fall further.

Read lot more in Rubber4U – 15th March 2011 issue

Rubber4U

1st March 2011 issue

Expectation of the Industry

To uplift the tyre industry from the hardening raw material prices, ATMA has submitted a pre- budget Memorandum to the Government for its consideration in the forth coming Budget 2011-12.

Tyre Industry is one of the raw material intensive industries, where raw material cost accounts for nearly 62% of tyre turnover and 70% of the production cost. Natural Rubber is one of the key raw material for the tyres, accounting 42% of the raw material cost, followed by Carbon Black and Nylon Tyre Cord fabric and Rubber Chemicals.

Consumption of synthetic rubber is also increasing on the back of spike in the natural rubber prices. The consumption of synthetic rubber in tyre industry has increased by 34% to 1.70 lakh MT in April - October 2010 and constituted 71.9% of the total synthetic rubber consumption.

The raw material prices are still shooting north and are recording a new high. The spike in the cost from the past 12 months have alarmed to the tyre industry and has resulted in contraction of operating margins on q-o-q basis in quarter ended December 2010.

Read lot more in Rubber4U – 1st March 2011 issue

Natrual rubber prices fall

In the domestic market natural rubber prices fell by Rs 7/- to Rs 231 per kg on 23rd February and today by Rs. 3/- to Rs. 228/-, due to fall in the prices in the international and domestic future markets.

The prices of natural rubber at the Kottayam market on 22nd February was at Rs 238/- per kg, which came down to Rs. 228/- as on today, a fall of Rs. 10/- per kg in two days.

Today prices of natural rubber (RSS3) in the Bangkok market closed at Rs 288.02 per kg as against Rs 289.31 per kg on 23rd February 2010.

The prices of rubber at Shanghai, the largest consumer, have also fallen as the demand from China is declining. According to General Administration of Customs, China's natural rubber imports in January declined 14% compared with the same month last year to 147,382 metric tonnes. January's natural rubber imports were down 19% from December, when 181,542 tonnes were imported.

Read lot more in Rubber4U – 1st March 2011 issue

Will the Govt. consider the request?

In 2010, vehicle sales in the country was one of the fastest and growing auto markets in the world. Auto component makers have witnessed an increase in sales, but going ahead rising input costs are seen weighing on margins. Auto parts makers want the government's help to upgrade technology and spur investments to boost capacity. At the moment sector don't have enough technology, they are importing technology.

The Auto Component Manufacturers Association (ACMA) has reiterated the need for a technology upgradation and development fund, which was ignored by the finance minister last year. The industry urgently needs a corpus of Rs 7,500 crore to be spent over five years and the industry body has asked for an initial corpus of Rs 1,000 in 2011-12. ACMA has sought 0% import duty on steel and aluminium alloys, which account for almost 60% of raw material costs of auto parts makers.

Natural rubber prices has skyrocketed of late, hitting profitability of rubber goods manufacturers and the industry has asked the government to allow duty free import of 200,000 MT of natural rubber for 2011-12. Even if entire natural rubber production is consumed domestically, the availability of NR will fall short of demand.


Read lot more in Rubber4U – 1st March 2011 issue

More reforms to follow and the Rubber Board data is factual

Prime Minister Manmohan Singh said that the government has not given up on reforms. More reforms will be unveiled in the Union Budget 2011-12. I sincerely hope in the upcoming Budget we will see a clearer picture of the reform agenda.

The government has been working on a host of reform initiatives, some of which have already been successful. I believe we are going to have a fresh wave of infrastructure investment with the help of public-private partnership model.

In response to allegations about the authenticity of Board data, Rubber Board Chairperson – Sheela Thomas in a statement has clarified that data provided by the board regarding NR stocks is factual; but the reported stocks may not be fully available in the market and also pointed out that the data is sourced from cultivators, traders, processors and manufacturers.

As on 31st January 2011, stock of natural rubber in the country was pegged at 327115 tonnes.

Read lot more in Rubber4U – 1st March 2011 issue

The New Rubber Board Chief

Smt. Sheela Thomas, IAS took over as Rubber Board Chairman on 7th February 2011. A 1985 batch IAS officer, has served the Kerala Government as Director - Social Welfare, Kottayam District Collector, Managing Director - Civil Supplies Corporation, Director - Industries, Director -Census Operations, Special Secretary - Agriculture, Secretary - Transport, Secretary - NORKA and Secretary - Information and Public Relations Department. It was while serving as the Principal Secretary to the Chief Minister of Kerala that Smt. Sheela Thomas was appointed as Rubber Board Chairman.

Smt. Sheela Thomas took over from V.J. Kurian, Chairman, Spices Board who has been holding additional charge of the Rubber Board since November 2010.

Read lot more in Rubber4U – 15th February 2011 issue

Rubber price at its peaks

Rubber prices made a glorious rebound on 4th February 2011, on strong demand and sharp gains in international and domestic future markets. According to industry experts, prices are set to break current records to create another historic high shortly.

Rubber grade RSS4 was at its all time high of Rs 239/- a kg. in the domestic market. As the growers do not get the international price (currently at Rs. 272/- a kg.) in the domestic market, have slowly started to push the rubber for export with an intention of realizing higher price. In turn, slowly export of rubber is on the rise.

Indian tyre makers bought natural rubber at a record $5.26 per kg on 4th February as farmers squeezed supplies seeking higher prices after a surge in the world markets. Supplies were less than expected as big farmers were not selling. They were anticipating further upside due to rising prices in Thailand.

The July delivery contract reached a high of 504 yen per kg before settling at 502.9 yen on the Tokyo Commodity Exchange. Tight rubber supply due to floods in Malaysia and slow arrivals of USS3 grade raw material in Thailand is also providing support to prices.

Read lot more in Rubber4U – 15th February 2011 issue

Import of natural rubber under TRQ scheme

In view of Customs Notification No. 128/2010-Customs dated 22.12.2010, to allow import of Natural Rubber under exim codes 4001 21, 4001 22 and 4001 29 at concessional duty in the current financial year 2010-11, it has been decided by Director General of Foreign Trade to invite applications for allocation of the TRQ of Natural Rubber from Actual users as per following details:
Applications for allocation shall be sent only by e-mail at rubbertrq2011@nic.in in the proforma at Annexure -1 to this Public Notice. Applications for allocation of TRQ shall be received from 18.01.2011 (12.00 noon) to 24.01.2011 (till 5.00 pm). EFC in DGFT will evaluate and allot TRQ to the applicants. The allocation of the TRQ will be based on the Natural Rubber consumption during 2009-10, as certified by Rubber Board. Allottees of TRQ shall file application in ANF2B along with prescribed application fee to concerned Regional Authority of DGFT, who will issue the TRQ authorization as per allocation by EFC. Imports of the allocated TRQ must be completed before 31.3.2011.

{Import of Natural Rubber under the Tariff Rate Quota (TRQ) Scheme in the current financial year 2010-2011 under Para 2.59 of HBP Vol.I, 2009-2014 - DGFT Public Notice No.23/(RE 2010)/2009-14 [F.No. 01/93/180/M-67/AM04/PC2(B)]}


Read lot more in Rubber4U – 1st February 2011 issue

It is really a grower’s paradise now

As the main season in production of natural rubber is coming to an end, growers are reluctant to sell their stock immediately in the hope of getting higher price, as the prices are rising daily. This affects the supply of natural rubber in the domestic market and the rubber good manufacturers are not getting rubber even at higher prices.

Today natural rubber RSS4 grade price reached a high of Rs 225/- a kg on strong global cues coupled with high demand. In Bangkok, price of RSS3 grade was at Rs 251.91 a kg.

The nourishing global market along with reports of low production and rising crude prices led to hoarding by growers and local traders expects the market would remain bullish for the next couple of months and are in the hope of price crossing Rs 250 a kg.

The huge gap in the domestic and global trading prices favours exports and indications are now bright for a rise in exports in the coming months.

The rubber-based industries, especially the tyre industry are now facing a serious crisis as imports are not viable even at a reduced duty of 7.5%.

Last month, the government had announced that it will permit the import of a maximum of 40,000 tonnes of natural rubber at a concessional duty rate of 7.5% by 31st March 2011, with the aim of checking rising domestic prices. Today government invited applications for import of up to 40,000 tonnes of natural rubber by the end of the current fiscal at a concessional duty rate of 7.5%.

Demand of tyre manufacturers to ban futures trading in rubber has been rejected. Managing Director and CEO of National Multi Commodity Exchange of India - Anil Mishra has urged tyre manufacturers to actively get involved in the futures market rather than keeping away from it.


Read lot more in Rubber4U – 1st February 2011 issue