Yesterday’s skid, today’s gain

International Monitory Fund has lowering its outlook for world economic growth this year to 3.3%, down from its forecast in January of 3.5%. It expects U.S economic growth of 1.9% in 2013, down from its January estimate of 2.1%. It expects that the combined economy of the 17 euro countries will shrink 0.3% in 2013.

A sharp decline in inflation, possibility of a rate cut in next month's Reserve Bank of India policy, falling prices of crude oil and gold could have a positive impact on India's trade deficit.

Physical rubber prices continued to remain under pressure. Decline in the international natural rubber prices and the absence of buyers dampened the sentiments. A seasonal pick-up in rubber production in Thailand might be one of the fundamental reasons for price fall. On 18^th April, sheet rubber weakened to `.159 a kg at Kottayam and today it closed at `.160 a kg, while on National Multi Commodity Exchange May series declined to `.157.22 and August to `.154.51 a kg. The RSS3 grade closed at `.148.74 a kg at Bangkok, while the price of Malaysian SMR 20 closed at `.126.65 a kg.

Rubber for September delivery on the Shanghai Futures Exchange gained 1.4% to 18,980 yuan a tonne. Thai rubber free-on-board lost 3% to 79.50 baht a kg. On the Tokyo Commodity Exchange, May futures series in current session for 22^nd April is trading at ¥248, June at ¥250.8, July at ¥253.3, August at ¥255.5 and the contract for delivery in September at ¥256 a kg.

Shinobu Watanabe, who is president of Chemicals & Plastics Co. business of Ube Industries Ltd. has been elected as president international of the International Institute of Synthetic Rubber Producers. Watanabe will preside over the organization's 2014 Annual General Meeting in Kyoto, Japan, and serve for the year 2013-2014.

Rate cut, lower deficit likely

On 3rd May, there is a possibility that Reserve Bank of India (RBI) will cut repo rate in its monetary policy. Weak growth and declining WPI inflation is likely to prompt RBI to consider a rate cut in its annual monetary policy. The rupee extended its gains to 54.33, strongest since 2nd April. The recent fall in commodity prices is a boon for the economy and would help in keeping the inflation in check and will help moderate oil and gold imports in the coming months. India is expected to reduce the fiscal deficit to 3% by 2016-17.

I said in the year 2012-13 I will bring fiscal deficit down to below 5.3%, and going forward, I will reduce the fiscal deficit every year by 0.6% until we have achieved the target of 3% in 2016-17. I said these are red lines. I will not breach these red lines, said the Finance Minister, P Chidambaram.  

In the domestic futures market, at 2.05 pm IST, the May 2013 series were trading in negative at `.158.40 a kg, June at `.157, July at `.156.99 and August at `.156.79 a kg on the National Multi Commodity Exchange. The price of Malaysian SMR 20 closed at `.129.05 a kg. The contract for delivery in September closed at ¥257.3 a kg on the Tokyo Commodity Exchange.

Read lot more in Rubber4U – 1st May 2013 issue

Inflation falls, so the rubber prices

The annual rate of inflation, based on monthly WPI, stood at 5.96% for the month of March 2013 as compared to 6.84% in February and 7.69% during March 2012. India's inflation has slowed in recent months due to weakening demand. The RBI responded to a slight cooling in headline inflation in recent months with two 25 basis point cuts this year to bring the benchmark repo rate to 7.50% in a bid to revive growth. The current account deficit has re-emerged as India's weakest economic spot after leaping to an all-time high of 6.7% of GDP in the December quarter. A high current account deficit is potentially inflationary because it can lead to a weaker currency and more expensive imports.

Currently there are no buyers at the current levels as they anticipate a further downtrend to occur in prices. In the domestic futures market, at 1.15 pm IST, the April 2013 series were trading in negative at `.158.70 a kg, May at `.159.60, June at `.158.40, July at `.157.60 and August at `.157 a kg on the National Multi Commodity Exchange. The price of RSS3 grade closed at `.157.23 per kg at Bangkok on 11^th April, while on 15^th April, Malaysian SMR 20 closed at `.134.28 a kg. The contract for delivery in September closed with a negative note at ¥259 a kg on the Tokyo Commodity Exchange.

Read lot more in Rubber4U – 1st May 2013 issue

Rubber4U

15th April 2013 issue 

IIP growth silps

The Index of Industrial Production (IIP) growth has slipped to 0.6% in February 2013, due to contraction in power generation and mining output and poor performance of manufacturing sector, compared to growth of 4.3% in February 2012.

According to official data released, during April-February period of 2012-13, the industrial production growth is at 0.9%, down from 3.5% during the same period of 2011-12.  The growth in the output of the key sector remained low at 1% in April-February 2012-13, as against 3.7% growth in the same period of 2011-12.

Read lot more in Rubber4U – 15th April 2013 issue

Market is supported by expectations

Rubber gained as Japan’s currency neared 100 per dollar, a level unseen since April 2009, bolstering demand for the yen-based commodity. The currency market gave the largest support to rubber futures, which advanced amid expectations top producers may take additional measures to support rubber prices. The contract for delivery in September advanced as much as to ¥280.8 a kg, the highest level since 28th March and currently trading at ¥278 a kg on the Tokyo Commodity Exchange.

While addressing at the opening of the ASEAN Rubber Seminar in southern resort province, Thailand deputy farm minister, Yuttapong Charasathien said, Thailand will set up a rubber-processing industrial estate in the southern province of Songkhla to be fully engaged in producing and marketing in parallel to a similar rubber park in Malaysia. Thailand targets to lower shipments by 10% through end of May to help support prices.

In India, natural rubber production in 2012-13 increased 0.9% to 912,200 tonnes from 903,700 tonnes, while consumption edged up slightly 0.8% to 971,980 tonnes from 964,415 tonnes compared to same period of previous year. In March 2013, natural rubber consumption edged up 6% to 79,000 tonnes against 74,500 tonnes in March 2012. While natural rubber production was 52,000 tonnes against 55,300 tonnes a year ago. The absence of summer showers has worsened the situation and rubber trees were damaged in many parts of Kerala. Extreme summer heat is expected to hit production in April and May.

Read lot more in Rubber4U – 15th April 2013 issue

Measures to shore up rubber prices

According to Indonesian Rubber Association (Gapkindo), during October to November 2012, Indonesia slashed as much as 111,000 tonnes of natural rubber from the market, inching closer to the commitment of 117,000 tonnes for six months, ending March 2013. According to the Gapkindo chairman, Daud Husni Bastari, the mechanism was still poorly supervised and it was unclear whether stakeholders carried it out according to their commitments. The Indonesian rubber industry will propose a review of the supply management that it has implemented when futures on the Tokyo Commodity Exchange plunged to a three-year low of ¥205.6 in August 2012. The review proposal will be rolled out during a meeting of the International Tripartite Rubber Council (ITRC) from Wednesday to Friday in Phuket-Thailand, which will decide further moves on shoring up of natural rubber prices.

There are no buyers at the current levels as they anticipate a further downtrend to occur in prices. If the international prices go up further, then the prices may climb further in the domestic market. The possibility of spot markets of natural rubber in India is strengthening. In the domestic futures market, at 3.30 pm IST, the April 2013 series were trading with positive note at `.161.10 a kg, May at `.162.10, June at `.161.65, July at `.161.57 and August at `.160 a kg on the National Multi Commodity Exchange. At Kottayam, RSS4 grade rubber closed at `.164.50 a kg and the price of RSS3 grade closed at `.154.07 per kg at Bangkok, while Malaysian SMR 20 closed at `.141.81 a kg. The contract for delivery in September closed at ¥275.5 a kg on the Tokyo Commodity Exchange.

Read lot more in Rubber4U – 15th April 2013 issue

Traders to intensify agitation

Traders of Federation of Associations of Maharashtra (FAM), represents about 750 trade associations of Maharashtra, are up in arms against the state government's decision of going ahead with the imposition of local body tax (LBT) in parts of the state are going to intensify their agitation by launching an indefinite strike from 22nd April 2013, till the government find a solution to the issues. LBT has already been imposed in lieu of octroi in various municipal areas of Maharashtra from 1st April 2013.

FTP 2013-14 by 3rd week of April and rubber falls

The Finance Minister, P Chidambaram in his Budget Speech had assured full support to be provided to exporters in the backdrop of growing current account deficit. It is expected that the Annual Supplement to the Foreign Trade Policy 2013-14 would be announced by the third week of April, which will address both the immediate and medium-term concerns of exports, besides giving a fillip to exports. During the April-February 2012-13, exports declined by 4% to US$265.95 billion. It is expected that the incentives would help in boosting exports and bridging the widening trade deficit.

Natural rubber prices dropped the most in two weeks as the Japanese currency strengthened to near a one-month high. The yen advanced amid speculation that additional easing measures from Bank of Japan. The sell-off is caused by the strong yen and lower-than-expected U.S. payroll data. The contract for delivery in September slumped to ¥252 a kg, the lowest since 19th November and closed at ¥258.5 a kg on the Tokyo Commodity Exchange. Investors reduced their positions in rubber due to holidays in China and tense situation in the Korean peninsula.

Today, in the domestic futures market, the April 2013 series is currently trading at `.161.75 a kg, May at `.164.30, June at `.164.30, July at `.164 and August at `.164.30a kg on the National Multi Commodity Exchange. In the domestic market RSS4 grade rubber closed at `.164.50 a kg and the price of RSS3 grade closed at `.153.46 per kg at Bangkok. While Malaysian SMR 20, closed at `.139.67 a kg.

Read lot more in Rubber4U – 15th April 2013 issue