Approval shows its effect

Thai cabinet approved a Natural Rubber Policy Panel proposal of 15 billion baht for stockpiling of natural rubber with an aim to boost the commodity’s price to 120 baht per kg. 5 billion baht will be given to state-owned Bank for Agriculture and Agricultural Cooperatives to provide financial support to farmers' organisations operating in rubber buying related businesses. The remaining 10 billion baht will be handed out to the Rubber Estate Organisation to directly purchase rubber from farmers and keep it in state warehouses.

Both organisations will buy rubber from producers for processing and wait for a good timing to sell it at an appropriate price. Thai rubber price had dropped to its lowest at Bt85 a kg., at the end of 2011, due to the global economic slowdown. The Thai move pushed rubber prices higher and currently it stands at Bt107 a kg. Price could rise much higher than this level when the Chinese buyers come back from a holiday.

The TOCOM benchmark contract for June delivery stood at 314 yen at 0621 GMT after rising as high as 315.3 yen per kg, up from Monday’s settlement of 306.0 yen.

Read lot more in the latest issue of Rubber4U

Domestic gain on China’s positive economic data

Today, Oil advanced above $101 a barrel, buoyed by positive economic data from China, which reported 8.9% growth in the fourth quarter, slower than the previous quarter but robust enough to indicate it would avoid sudden slowdown. 

Natural rubber prices firmed up further, market improved following the early gains on the National Multi Commodity Exchange (NMCE), but the late declines in domestic futures failed to make any visible impact on prices as major consuming industries were not active in the market.

Domestically, RSS4 grade firmed up to Rs 191 from Rs.189.50 a kg at Kottayam-Kerala. In futures, the February series closed at Rs 195.55, March at Rs 199.40, April at Rs 205.12, May at Rs 209.40, June at Rs 206.01 and July at Rs 204.51 a kg on NMCE.

RSS3 grade improved to Rs 184.7 from Rs. 179.71 a kg at Bangkok. The January futures for the grade flared up to ¥284 from ¥274 a kg during the day session but then dropped to ¥280.5 in the night session on the Tokyo Commodity Exchange.

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Opposition to GM rubber in India & Thailand aims to lift NR price

The world's largest producer and exporter of natural rubber, plans to spend 15 billion baht ($472 million) in the market as a price intervention measure to boost natural rubber prices to a floor price of THB120 a kg. The price support proposal will be submitted to the cabinet for approval on 24^th January. The fund will come from the state owned Bank for Agriculture and Agricultural Co-operatives, with natural-rubber stocks used as the collateral.

The move comes after growers in south Thailand launched a mass rally to protest over the government's alleged mishandling of rubber issues and pressure the government to quickly resolve falling natural rubber prices.

India is the first country to successfully develop genetically modified (GM) rubber plant. The Rubber Board had developed the plant with the hope of increasing productivity in the country. The Centre has given clearance to the Rubber Board to cultivate GM rubber on a trial basis in Kerala and Maharashtra.

The strong opposition of the Kerala government to GM rubber plants is bound to hit the productivity of natural rubber. The state government had said that it was against promoting GM crops and refused to grant a no-objection certificate. This has come as a blow to the board, which was all prepared to conduct the trials in Pathanamthitta in Kerala.

The decreasing area of cultivation and other negative factors have slightly affected the output in the country. The conventional method of planting takes about 7-8 years to give yield, were as the GM rubber trees could be tapped in 5 years after their planting.

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Malaysia eyes India’s automotive segment

The world's fourth largest natural rubber producing country aims to sell rubber automotive parts in India. Malaysian exporters are trying to force into India's vibrant automotive segment and are confident about their quality products which have an edge to penetrate the already congested Indian market. 

According to a auto industry analysts, Indian passenger car sales is forecasted to hit a healthy 11-13% growth in 2012. Overall, India imported rubber based automotive parts worth US$356 million in 2010, with Malaysian exporters grabbing roughly 2% of the market share, making Malaysia the 11th largest foreign supplier.

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Rubber may dip for consolidation as there is a safer road ahead for auto sector

The sovereign debt crisis in Europe and lower offtake by China have kept the global rubber prices depressed. Rubber prices may decline amid concern that demand from China may slow, after stockpiles increased to a 10 month high. Natural rubber inventories monitored by the Shanghai Futures Exchange rose by 900 tonnes to 33,874 tonnes, the highest level since March 2011. Currently, demand from China is not strong enough to push up rubber prices and there is no tightness in supply as a slowdown in the global recovery curbs consumption.

The current global economic scenario and an unfavourable demand outlook are likely to keep speculative investors away from the commodities market. Oil is trading near the lowest price in more than a week in turn weakening the appeal of natural rubber as an alternative to synthetic rubber.

There is little possibility for the global economy to return to a recovery path by first quarter of 2012. Under such circumstance, demand for rubber is likely to stay sluggish during the first quarter of 2012. The sentiment in the natural rubber market could improve from February on lower supply as wintering season will begin during February-March with slight variation across countries. This could lead to positive sentiment since production could drop.

The financial year 2012-13 is going to be a challenging year for auto sector. There is an indication that the RBI is not likely to increase rates further. If the rate is decreased, it will immediately boost the sentiments of the customers, which in turn will boost the auto growth.

Read lot more in Rubber4U – 15th January 2012 issue

Mass rally to protest

Thailand’s rubber growers plan to stage a mass rally in front of Prime Minister Yingluck Shinawatra's residence in Bangkok from today onwards to protest over the government's alleged mishandling of rubber issues and pressure the government to quickly resolve falling natural rubber prices.

Today, RSS-3 grade closed at Rs 175.81 a kg at Bangkok. Current trading session at Tokyo Commodity Exchange futures (at15:39 JST) prices for January delivery trading at ¥256.8 a kg, for February delivery trading at ¥260 a kg, March trading at  ¥264 and ¥268.2 a kg for April 2012 contract.

Read lot more in Rubber4U – 15th January 2012 issue

Demand to remain weak, but gap to increase

According to a recent report of Association of Natural Rubber Producing Countries (ANRPC), the natural Rubber demand is expected to remain low for 2012, due to the deepening Euro debt crisis. Large number of rubber based units are in crisis across the globe, find it difficult to resist the situation. Growers and traders expect natural rubber prices to hold firm in the first-half of 2012.

The economic slowdown and a flood of imported rubber products hit the domestic rubber industry, while short supplies and high prices of natural rubber affected the rubber based units, especially those in the small and tiny sectors, said Vinod Simon, president of All India Rubber Industries Association.

Tyre manufacturers and other rubber based industries fear that the gap between production and consumption would widen further in the New Year, as the industry has lined up large-scale investments in the truck and bus radial segments, expects natural rubber demand to go up. Rubber industry has reiterated its demand for duty free imports as a short-term measure. Industry hope that the government would bring down the import duty on latex to the level of natural rubber and raise import duty on finished rubber products.

New Year has begun on a challenging note, the gap between domestic production and consumption was likely to widen as efforts to import natural rubber proved expensive on account of the depreciation in rupee value, said Neeraj Kanwar, Chairman of Automotive Tyre Manufacturers' Association.

Read lot more in Rubber4U – 15th January 2012 issue

China's NR import duties unchanged

The Customs Tariff Commission under China State Council issued a notice on its arrangement for 2012 tariff implementation plan of duties on importing natural rubbers, which will remain the same as in 2010, which was as given below:

• Natural latexes under HS Code 40011000 are to be subject to the interim duty rate of 10% or CNY 720/ton, whichever is less.
• Smoke sheet rubbers under HS Code 40012100 are to be subject to 20% or CNY 1,600/ton, whichever is less.
• Technically specified natural rubbers under HS Code 40012200 are to be subject to 20% or CNY 2,000/ton, whichever is less. 

Read lot more in Rubber4U – 15th January 2012 issue