Rubber’s downtrend continues

In tune with the gloomy global economic sentiment which has spread wide around the globe. With a stalling Chinese economy, a quickly falling economic growth rate in India, Greece and Spain continuing to remain in the economic doldrums and France in a disturbed polity, commodities including rubber gave no clear clue as to where they are heading.

Besides the quick declining Indian economy and fears of the dire straits of Spanish finances there are increasing signs and signals now that the global economic recovery is tottering in no uncertain terms.

Rubber stockpiles in China’s Qingdao port, the main shipment hub are starting to expand as demand slows. Natural rubber continued to remain under pressure in international markets. Weak manufacturing data from China pulled down the TOCOM market. TOCOM rubber futures dropped to a six-month low on lingering worries on the Euro Zone debt crisis and strong yen, raising further concerns over the demand for the commodity. It now looks to test further on the downside with a target of ¥240 at TOCOM and on the other hand in India it is expected to reach around `.178 per kg., in short period.

China’s tyre and auto markets have yet to come to terms with a scenario where Chinese demand is diminishing faster than anticipated. Weak auto sales in China, especially falling sales of trucks, coincide with a lackluster market in the U.S. and Europe may lead to a surplus of the commodity. According to the industry sources, oversupply and weak demand are putting pressure on the synthetic rubber prices and are expected to fall further during the current month.

The growth of India's industrial production, which had declined by 3.5% in March 2012, just about managed to stay in positive territory at 0.1% in April as compared to the level in the same month of last year.

In India, natural rubber production declined by 5% to 1.10 lakh tonnes in the April—May period from 1.16 lakh tonnes in the same period of the 2011—12 fiscal. Consumption grew marginally by 1% to 1.63 lakh tonnes against 1.61 lakh tonnes in the same period of 2011—12.

Natural rubber import rose by 13% to 18,419 tonnes last month from 16,293 tonnes in the year—ago period, whereas exports fell by 63% to 1,131 tonnes against 3,031 tonnes in the same period last year. The stock of natural rubber in the country at the end of May 2012 stood at 2.22 lakh tonnes.

Read lot more in Rubber4U – 15th June 2012 issue