AIRIA Office Bearers for 2012-13

Rubber advances on improvement in demand

Natural rubber prices in India are likely to extend further gains on strong demand and as farmers curtail supplies, hoping prices would rise further. Everyday prices are rising. It is giving growers reason to hold back supplies. Many growers expect the price to cross `.200 per kg. Supply of commodities has become a major concern among local downstream commodity based industry players.

Tyre makers kept lower inventory as prices were falling and now due to sudden rise in prices they want to restock inventory, but suppliers are not ready to supply at the current level. Due to rise in international prices, even imports are slowing down. Tyre manufacturers have signed fewer deals for September delivery, as prices were falling.

Today RSS3 grade closed at `.172.63 a kg at Bangkok. RSS4 grade rubber ruled firm in the Indian market buoyed by a jump seen in natural rubber prices in the major international market and most probably will close around at `.195 a kg. In the domestic futures market, the October series may close at `.192, November at `.191 and December at `.192 a kg on the National Multi Commodity Exchange. On TOCOM rubber futures, for October series were trading at ¥250 a kg, November at ¥251, December at ¥252.4, January at ¥254.4 and February at ¥256.5 a kg., in current trading session for 19^th September.

Read lot more in Rubber4U – 1st October 2012 issue

Positive step

The wholesale price based inflation for August moved up to 7.55% from 6.87% in the previous month. As inflationary tendencies have persisted, controlling it is the top most priority. Inflation risks still remain high; taking a cautious stance, Reserve Bank of India cut CRR by 0.25%, but refrained from reducing lending rates in view of high inflation. CRR cut would be effective from 22^nd September.

The RBI decision, which comes days after a slew of measures taken by the government to push growth, will release `.17,000 crore of primary liquidity into the system. It is a positive move, as a mid-term policy it is very important.

Read lot more in Rubber4U – 1st October 2012 issue

Don’t expect much action today

Thai rubber intervention plan started in March and the cabinet had allocated the ministry a 15 billion-baht budget to buy rubber from cooperatives and community businesses at 100 baht a kg for raw rubber sheet and 104 baht/kg for smoked rubber sheet.

According to Damrongsak Phrammanee, head of a government centre that buys rubber in Nakae district of Thailand, rubber traders in the northeastern province are using fraudulent methods to cheat the government’s 15 billion baht rubber price intervention scheme. The programme aimed at halting the decline in rubber prices, had to temporarily stop purchasing rubber after it found that traders were posing as farmers to sell their products to the centre. Traders take advantage by buying rubber products at lower prices from the farmers who are badly in need of cash and were willing to sell their crops at lower prices and finally traders selling the same to government at the higher prices guaranteed by the scheme.

Economic fundamentals are sluggish but news from ECB and China favourably improved market sentiment, futures also advanced on speculation that Chinese buyers will build up stockpiles ahead of national holidays in early October.

Read lot more in Rubber4U – 1st October 2012 issue

Decision impact likely to be seen tommorrow

Fed action to help the U.S. economy might mean more demand for oil and other energy products.

Crude oil futures have jumped to $98.28 a barrel (Brent Crude Oil - $116.60 a barrel) ahead of a widely anticipated statement from the Federal Reserve's policy making board.

Petrochemicals prices have risen sharply since July following high crude oil prices. Petrochemicals now find new applications in plastic, rubber, nylon and nearly every commercial industry. Rise in crude oil prices are generally perceived to be helpful for natural rubber industry as it makes synthetic rubber costlier compared to former. Natural rubber prices have started climbing after major rubber producing nations announced curbs to export and production to stem sharp decline in prices this year.

Indian consumers are worst hit due to falling value of rupee against dollar making the raw materials more costlier. India is a net importer of the by-product and domestic prices are set by tracking international price. Most raw material prices have gone up between 10-15% in the Indian market.

Today, Indian government further raised the price of subsidised diesel by 12% or Rs.5 per litre, to rein in the fiscal deficit. A cabinet committee agreed to raise diesel prices and restricted sales of subsidised LPG cylinders to six per consumer annually. It left petrol and kerosene prices unchanged. The measures are effective from Friday. 

Read lot more in Rubber4U – 15th September 2012 issue

Hoping for the best

The eurozone cleared a key hurdle towards resolving its debt crisis, after Germany's constitutional court allowed a permanent bailout fund to go ahead. US Federal Reserve could soon decide to unleash more stimulus cash, or quantitative easing, at its latest monetary policy meeting.

Markets have been speculating for weeks whether or not the U.S. central bank will announce fresh stimulus measures. Markets were eyeing the outcome of the Fed’s policy meeting today, amid growing speculation that the U.S. central bank may implement a third round of quantitative easing to support growth. European stocks are expected to start flat as investors hold their breath ahead of the U.S. Federal Reserve's rate decision. Profit taking continues ahead of the Fed decision.

Read lot more in Rubber4U – 15th September 2012 issue

Good day for NR expected

Thailand Government turned down the plan to devote extra funds for rubber intervention. However, it will review the situation to ascertain whether further buying is necessary to support prices.

Natural rubber futures in India are likely to trade steady during the week as thin arrivals offset poor demand from tyre makers due to a slowdown in auto sector. Natural rubber prices will be active as supply is tight due to continuous rains in Kerala. There will be some consolidation in rubber, but the trend is weak as imports have gone up. Natural rubber imports during April-July period jumped nearly 27% to 76,666 tonnes.

Today RSS3 grade closed at `.157.53 a kg at Bangkok and most probably RSS4 grade rubber in India will also close with a positive note around `.176 a kg. On the National Multi Commodity Exchange, the September series may close around `.182 a kg. and on TOCOM rubber futures, September series may close around ¥227 a kg. and can expect further upward trend in tomorrow’s trade.

Rubber prices have firmed up in Indian markets possibly on rains in Kerala impacting production of rubber and likely revival of automobile sales in the festive season as manufacturers offer more discounts and gifts to lure customers.

Read lot more in Rubber4U – 15th September 2012 issue

Still rubber waiting for directional move

Asian markets surged after European Central Bank (ECB) chief Mario Draghi unveiled a plan to buy the bonds of troubled eurozone nations such as Spain and Italy in order to lower their cost of borrowing and help them get back on their feet under a scheme named “Outright Monetary Transactions”.

Further support came from positive macroeconomic reports from the U.S data showing many more jobs than expected were created in the private sector, lifting hopes for the world’s number one economy.

The ECB would buy unlimited amounts of debt from troubled nations but the purchases would depend on those countries asking for bailout cash and agreeing to undertake economic reforms.

RSS4 grade rubber ruled firm in the Indian market buoyed by a jump seen in natural rubber prices in the major international market and closed at `. 174.50 a kg, but still prices continued to vary in tight ranges awaiting fresh cues for further directional moves. In the domestic futures market, the September series closed at `.178.57, October at `.173.39, November at `.173.11 and December at `.174.03 a kg on the National Multi Commodity Exchange. On TOCOM rubber futures, for 10^th September current trade as of 8th September at 04:25 JST, September series were trading at ¥221.2 a kg, October at ¥223.8, December at ¥225.4 and February 2013 at ¥226.6 a kg.

Read lot more in Rubber4U – 15th September 2012 issue

Short term upward trend

Tocom rubber futures surged ahead on hopes of further stimulus from US Fed Reserve and price support initiatives recently announced by major rubber producing countries. Tocom rubber futures settled higher tracking strong gains on Shanghai and one can see the resistance at ¥235 a kg. On TOCOM rubber futures, as of 4th September at 14:20 JST, September series were trading at ¥220.0 a kg, October at ¥222, December at ¥227.5 and February 2013 at ¥229.9 a kg. Physical prices of Thai USS3 rubber also climbed to THB77.29-THB77.77/kg. The commodity arrivals are low due to rain in south Thailand recently, which limits tapping.

China’s economy grew just 7.6% in the three months to June, the worst performance in three years and the sixth straight slowdown, while figures for trade, industrial output and retail sales in July were also weak. China will release its July trade data on Friday, with commodity imports expected to decline for the second consecutive month.

Automobile sales giving no hope for further uptrend, spot rubber prices in India have fallen to Rs 169 and on Monday, it closed at 172 per kg and RSS3 grade closed at `.152.94 a kg at Bangkok with a positive note. India’s GDP growth have fallen to 5.5% from 8% a year ago, the outlook remains bleak for automotive sector, although demand is expected to pick up during the festival season.

Read lot more in Rubber4U – 15th September 2012 issue