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
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