Rubber4U

Rubber4U - 1st August 2013 issue

RBI keeps rates unchanged

The Reserve Bank of India (RBI) in its first-quarter monetary policy review has retained CRR and repo rates unchanged, in line with its statement yesterday that its immediate focus would be to stabilise the rupee and to control the current account deficit.

While addressing a press conference, RBI governor D. Subbarao said RBI has cut 2013-14 GDP growth forecast to 5.5% from 5.7%. Rupee stability to allow RBI to revert to supporting growth and structural measures needed to bring CAD down to sustainable levels, for this RBI stands ready to use all available instruments and measures at its command.

Today, RSS3 grade closed at `.147.38 a kg at Bangkok, while Malaysian SMR20 closed at `.129.83 a kg. On the Tokyo Commodity Exchange, August futures series closed at ¥239.8, September at ¥240.1, October at ¥240.7, November at ¥241.3, December at ¥242.5, and the contract for delivery in January closed at ¥243.6 a kg. On National Multi Commodity Exchange, natural rubber August futures were trading at `.191.75, September at `.179.54, October at `.169.75, November at `.164.01 and December at `.164 a kg, at 12.30 pm IST.

More reforms expected

The Reserve Bank of India will announce its June quarter policy on Tuesday. RBI has recently taken several measures to curb volatility in the rupee-dollar rates. More reforms in the coming months are expected as the Prime Minister met the captains of industry and business. Industry leaders asked for immediate rate cut and demanded that the government give priority to reviving investment and industrial growth. However, the PM has indicated that any reduction in interest rate will be possible only if the rupee strengthens. The overall sentiment was on the need to bring back the mood, converting decisions to action and taking the country back to a growth path of 8% or more.

Rubber weakened as Yen rebound

As Japan’s currency breaching 100 a dollar, appeal for yen based contracts increased, but today rubber slumped to the lowest level in more than a week as Japan’s currency rebounded to a one month high. The contract for delivery in January lost as much as 3.85% to ¥241.8 a kg on the Tokyo Commodity Exchange.

In the Indian market, shortage of natural rubber and decrease in production has pushed up the prices. At Kottayam, RSS4 grade closed at `.195 a kg, while RSS3 grade closed at `.148.19 a kg at Bangkok and Malaysian SMR20 closed at `.129.96 a kg. On the Tokyo Commodity Exchange, August futures series closed at ¥238.5, September at ¥238.7, October at ¥238.6, November at ¥239.8, December at ¥240.7 and the contract for delivery in January 2014 closed at ¥241.8 a kg, after touching a high of ¥247.8 and low of ¥240.2 a kg. While on the National Multi Commodity Exchange August futures were trading at `.191.40 a kg, September at `.179.15, October at `.169, November at `.163.50 and December at `.163.60 a kg at 4.00 pm IST.

Read lot more in Rubber4U – 1st August 2013 issue

Rupee strengthen, rubber losing ground

The rupee today rose to 58.93 against dollar on fresh dollar selling, it’s highest since 19th June, as banks and exporters, preferred to reduce their dollar position, tracking a weakness in the US currency overseas, amidst measures taken by Reserve Bank of India.

China’s manufacturing weakened further in July, signaling that the worst of the slowdown has yet to be reached, increasing concern that demand may slowdown. July was the third straight month with an under 50 PMI reading, a benchmark that indicates that the sector is contracting. The lower-than-expected PMI data prompted investors to sell rubber. According to experts, China is likely to see a gradual decline in growth in the range of 6.5- 7.5% in 2013, in that case there is a possibility that oil could go down to around $75-80 per barrel. 

On Wednesday, RSS4 grade rubber closed at `.195 a kg at Kottayam. Today, RSS3 grade closed at `.152.92 a kg at Bangkok, while Malaysian SMR20 closed at `.133.87 a kg. On the Tokyo Commodity Exchange, July futures series closed at ¥253, August at ¥251.2, September at ¥252.3, October at ¥252.9, November at ¥254.1 and the contract for delivery in December closed at ¥255.8 a kg. On National Multi Commodity Exchange, natural rubber futures witnessing a negative trend and August futures were trading at `.191, September at `.180.30, October at `.170.99 and November at `.165.50 a kg, at 1.30 pm.

Tyre maker MRF Ltd. has posted a 57% rise in the third quarter net profit at `.227 crore against `.144 crore in the previous corresponding quarter. Total income increased marginally to `.3,051 crore  against `.3,008 crore.

Rubber market to remain in range bound

World oil prices dropped with New York crude taking a hit from disappointing US data. The price decline (currently trading at US$107.05 a barrel at 5.54GMT) was triggered by weaker-than-expected existing home sales in the US. The rubber market is expected to remain quiet due to sluggish demand as China had slowed down purchases due to high domestic inventories. Tyre manufacturers were using locally grown rubber for their manufacturing purposes as it was cheaper due to oversupply and also building up stocks for future use.

Every drop is supported by physical buying and every rise is used by investors to cash out. On Tuesday, RSS4 grade rubber closed at `.195 a kg at Kottayam. While on Wednesday, RSS3 grade closed at `.153.11 a kg at Bangkok and Malaysian SMR20 closed at `.135.25 a kg. On the Tokyo Commodity Exchange, July futures series closed at ¥251, August at ¥253.5, September at ¥254.3, October at ¥254.8, November at ¥255.4 and the contract for delivery in December closed at ¥257.1 a kg. National Multi Commodity Exchange natural rubber futures witnessed negative trend and August futures were trading at `.191.59, September at `.181.30, October at `.171.40 and November at `.164.97 a kg, at 12.20 pm.

Natural rubber prices are likely to rule firm on soaring crude oil from which its alternative synthetic rubber is derived. Besides supply and demand factors, the market will also be influenced by the performance on the Tokyo Commodity Exchange and the Shanghai Futures Exchange.

Read lot more in Rubber4U – 1st August 2013 issue

Facts & Figures about 2012-13 Forecast

Rubber4U Anniversary Issue

Rubber4U - 15th July 2013 issue

Petrol price hiked

Indian oil companies announced the hike of petrol price by a further `.1.55 a litre, without taxes, effective from midnight, as the falling rupee is making the import of crude costlier. Currently, the rupee is more vulnerable than ever before. Though the Government is making the right noises, it is unable to contain the weakness of the currency. Overall business sentiment also remains weak and the recovery is unlikely to happen anytime soon, as the interest rate may not come down quickly.

The worst will soon be over for the Indian economy. With more than normal monsoon, the economy should improve going forward.

Read lot more in Rubber4U – 15th July 2013 Anniversary issue

Production down, prices moves up

India’s natural rubber production fell 12.9% to 54,000 tonnes, while consumption also fell 2.3% to 82,000 tonnes in June 2013, when compared to same month of 2012. Natural rubber imports fell 4.97% to 19,695 tonnes in June, compared to same month of 2012.

In the Indian market, shortage of natural rubber and decrease in production has pushed up the prices. At Kottayam, RSS4 grade closed at `.195 a kg, while RSS3 grade closed at `.154.10 a kg at Bangkok and Malaysian SMR20 closing at `.131.69 a kg. On the Tokyo Commodity Exchange, July futures series closed at ¥240.4, August at ¥241.5, September at ¥243, October at ¥243.7, November at ¥244.7 and the contract for delivery in December closed at ¥245.1 a kg. While on the National Multi Commodity Exchange July futures were trading at `.193, August at `.188.15, September at `.179, October at `.171.99, November at `.166 and December at `.169 a kg.

Read lot more in Rubber4U – 15th July 2013 Anniversary issue

Rubber rebounds as oil rally

Rubber climbed after oil in New York surged to a 15 month high, boosting the appeal of natural rubber as an alternative to synthetic rubber. Rubber chased gains in oil amid speculation that the U.S will maintain monetary stimulus to support growth. Rubber for delivery in December on the Tokyo Commodity Exchange advanced to ¥245.1 a kg, after touching a low of ¥235.6 a kg.

According to the customs agency, natural rubber imports by China, has decreased to 130,000 tonnes in June 2013, from 163,317 tonnes in June 2012 and 177,400 tonnes in May 2013.

Heavy rains disrupting rubber tapping in Kerala and the growers are holding on to the available stock in anticipation of further rise in natural rubber prices. Currently rubber is at its nine month high.

Cut in global growth forecast

The International Monetary Fund has cut its forecast for world economic growth for a third time during the year, due to slowing emerging markets and a prolonged recession in the Euro zone. It now expects world output to expand by just 3.1% in 2013, but IMF expects a slight acceleration in growth in 2014 to 3.8%.

The price of crude oil currently trading at US$104.68 (at 9.40 GMT) and if the price rises above US$105 per barrel, will have a negative impact on the economy and also will end up affecting consumer spending in a very negative way.

Today, RSS3 grade closed at `.155.10 a kg at Bangkok, while Malaysian SMR20 closed at `.130.12 a kg. On the Tokyo Commodity Exchange, July futures series closed at ¥231.9, August at ¥233.3, September at ¥232.7, October at ¥233.6, November at ¥234.4 and the contract for delivery in December closed at ¥234.7 a kg. While on the National Multi Commodity Exchange July futures were trading at `.195.52, August at `.192.01, September at `.184.16, October at `.177.47, November at `.171.90 and December at `.172.48 a kg., at 2.30 pm IST.

Is rubber inching up for a fall?

Oil prices climbed after jobs data from the US beat expectations, boosting confidence in the world’s biggest economy. Rubber climbed as Japan’s currency declined to a five-week low against the dollar, boosting the appeal of yen-denominated contracts. The currency is currently trading at 101.21 against dollar at 11.33 GMT. Today, rubber contract on the Tokyo Commodity Exchange for delivery in December declined to ¥240.1 a kg, after touching a high of ¥247.8 a kg.

In the Indian market, shortage of natural rubber is pushing up prices. At Kottayam, RSS4 grade closed at `.190 a kg, while RSS3 grade closed at `.160.24 a kg at Bangkok and Malaysian SMR20 closing at `.131.96 a kg.

India’s Finance Ministry has extended the validity of existing anti-dumping duty on rubber chemicals - MBT, CBS, TDQ, PVI, and TMT imported from China and PX-13 (6PPD) imported from South Korea, will remain in force till 4th May 2014.

Will rubber lose the ground?

The Egyptian army seized control of the government on Wednesday, ousting the country’s first democratically elected president. Oil prices driven by the events of a military coup in Egypt reached their highest point of the year at $103.22 a barrel. The benchmark for oil prices in Europe - Brent crude rose to $107.43 a barrel.

The benchmark Tokyo rubber futures rose as solid U.S. jobs growth data late last week lifted hopes of improvement in the world’s top economy and caused the dollar to rise against the yen. On Monday, the Tokyo Commodity Exchange rubber contract for December delivery most probably will touch a low of ¥241 per kg.

Shortage pushing up prices

Asian butadiene prices are at a three & half year low amid weak demand and a glut of synthetic rubber stocks. The export of synthetic rubber feedstock fell 32% m-o-m in May to 16,458 tonnes, from South Korea. China Petroleum and Chemical Corp (Sinopec), slashed its ex-works prices for styrene butadiene rubber by 5-6% effective Wednesday. Sinopec Qilu Petrochemical is offering SBR1502 in East China at Yuan 10,700/mt, or about $1,364/mt on an import parity basis. The price cuts are a result of poor demand and high synthetic rubber stocks in China.

Rubber at Qingdao, which makes up the bulk of China's inventories, has been offered at a discount to prices in Southeast Asia, after stocks rose well above the usual level of 250,000 tonnes, indicating ample supply. Rubber prices were at multi-year lows as Chinese tyre makers have been forced to reduce imports and turn instead to country's bonded warehouse supplies and also U.S and European demand for the commodity at its low.

The shortage of natural rubber is hitting the operations of rubber goods manufacturing sector and this situation is pushing up domestic prices (at `.189 a kg), now higher by `.28 a kg compared to RSS3 grade, which closed at `.160.39 a kg at Bangkok and Malaysian SMR20 closing at `.133.66 a kg, setting the stage for a likely surge in import of natural rubber or for implementation of new duty structure. While Tokyo Commodity Exchange, December futures series closed at ¥246.9 a kg, after touching a low of ¥241.3 and a high of ¥247.7a kg.

Auto sales continues down trend

On global front, European Markets carried the momentum even after the bad data from China and markets performed well on the hopes that in Thursday's ECB meeting, interest rates and stimulus will be kept unchanged and all eyes are fixed on how the US markets will perform.

In April-May 2013-14, the Indian eight core sectors registered a growth of 2.4% as against 6.5% in the same period last year. The decline in the growth rate in May was mainly on account of negative growth witnessed in the production of coal, crude oil, natural gas and fertiliser.

Auto sector has witnessed de-growth in the month of June 2013 amidst an overall decline in the auto industry. Car companies continue to struggle as they reported lower sales in June because of a variety of reasons ranging from high interest rates, fuel prices to declining economic growth. The depreciating rupee resulting in spiralling fuel costs coupled with high interest rates and the additional excise duty on SUVs has further dampened the industry.

Supply of natural rubber is extremely tight in the domestic markets, RSS4 grade closed with a positive note at `.181 a kg at Kottayam. Today, RSS3 grade closed at `.161.28 a kg at Bangkok, while Malaysian SMR20 closed at `.132.82 a kg. On the Tokyo Commodity Exchange, July futures series closed at ¥240, August at ¥240, September at ¥241.6, October at ¥243.2, November at ¥244.6 and the contract for delivery in December closed at ¥245.6 a kg, after touching a low of ¥239.3 a kg. While on the National Multi Commodity Exchange July futures were trading at `.190.52, August at `.186.30, September at `.179.74, October at `.174.76.06, November at `.173.17 and December at `.173.26 a kg., at 12.10 pm IST.

Read lot more in Rubber4U – 15th July 2013 issue