New Year - Rubber4U Issue

Rubber4U - 1st January 2014 issue

Challenging cheerful year ahead

The rupee hit all-time lows against the U.S. dollar in late August amid a global emerging market sell-off and concerns about India's record current account deficit. While the currency has clawed back some ground since new RBI governor took office in September.

The governments of many countries have doled out economic stimulus packages for the automotive industry to add vigor to automobile manufacturing, which have led to an increase in the level of production and demand for tyres. Tyres are not only used in new vehicles, but need to be replaced in old vehicles as well due to wear and tear. Replacement is also a major market for tyres, which is steadily growing.

Imports became controversial since prices that rose to over `.195 a kg in August and dropped to around `.150 a kg during the first half of December. Prices have recovered to some extent, primarily after the government revised import duty to 20% or `.30 a kg, whichever is lower, which came into effect from 20th December 2013. Government has kept the ad valorem rate at the same level, while the specific rate is fixed. The specific rate will come into play when prices of imports fall.

In June, a positive response from the shareholders clears the path for Apollo Tyres to complete the merger process and expects to close the transaction by year end and it was slated to be the single largest outbound deal in India’s automotive industry. But US based Copper Tire & Rubber Company said it was terminating the stake sale arrangement with Apollo Tyres Ltd.

The Asian market is expected to provide a boost to the tyre industry. The U.S. and European region is projected to witness a growth below the global average, which is boosted by rubber requirements in China. Latin America and the Middle East are also expected to up the demand for tyres due to increased automotive production in the regions.

On the last day of the year, RSS4 grade closed at `.164 a kg at Kottayam. On Monday, National Multi Commodity Exchange January 2014 futures closed at `.166.55 a kg, February at `.169.05, March at `.171.92, April at `.174.90 and May at `.176.25 a kg. Tokyo Commodity Exchange, January 2014 futures series closed at ¥279.8 a kg, February at ¥275.9, March at ¥273.8, April at ¥272.9, May at ¥273.7 and the contract for delivery in June 2014 at ¥274.5 a kg. While RSS3 grade closed at `.157.49 a kg at Bangkok and Malaysian SMR20 closed at `.142.08 a kg, on Friday.

Rubber4U wishes all its readers and well-wishers a Happy & Prosperous New Year

It's time to move forward

The agreement which was slated to be the single largest outbound deal in India’s automotive industry, has collapsed. US based Copper Tire & Rubber Company said it was terminating the stake sale arrangement with Apollo Tyres Ltd. 

Today, RSS4 grade closed at `.164 a kg at Kottayam, while National Multi Commodity Exchange January 2014 futures closed at `.166.55 a kg, February at `.169.05, March at `.171.92, April at `.174.90 and May at `.176.25 a kg. Tokyo Commodity Exchange, January 2014 futures series closed at ¥279.8 a kg, February at ¥275.9, March at ¥273.8, April at ¥272.9, May at ¥273.7, and the contract for delivery in June 2014 at ¥274.5 a kg. While on Friday RSS3 grade closed at `.157.49 a kg at Bangkok and Malaysian SMR20 closed at `.142.08 a kg.

What our readers say: http://rubber4u.com/Public/Views.pdf

Read lot more in New Year - Rubber4U – 1st January 2014 issue

New Year to bring cheer

Depreciated currency, combined with economic revival in the US and EU could translate to robust business opportunities for Indian exporters in 2014. Global rubber surplus seen expanding as production outpaces demand. Taking current scenario into consideration, a rebound in Indian natural rubber price in the coming months is highly anticipated.

On Saturday, RSS4 grade closed at `.163 a kg at Kottayam, while National Multi Commodity Exchange January 2014 futures closed at `.165.90 a kg, February at `.168.57 and March at `.171.60 a kg. While on Friday RSS3 grade closed at `.157.49 a kg at Bangkok, while Malaysian SMR20 closed at `.142.08 a kg. Tokyo Commodity Exchange, January 2014 futures series closed at ¥279.8 a kg, February at ¥274.7, March at ¥275.3, April at ¥275.4, May at ¥276.2, and the contract for delivery in June 2014 at ¥277.3 a kg.

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Import duty hiked

The import duty on natural rubber will be 20% or `.30 a kg, whichever is lower, according to a senior Finance Ministry official. The new duty has come into effect from 20th December 2013. Government has kept the ad valorem rate at the same level, while the specific rate is fixed. The specific rate will come into play when prices of imports fall. As a result RSS4 at Kottayam closed at `.156 a kg on Saturday. For more details visit www.rubber4u.com /Statistic / Notice.

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Markets cautious

World markets were cautious on Wednesday as investors waited to see if the Federal Reserve might announce it is trimming its massive stimulus program. The Federal Reserve has announced that it will cut its monthly bond-buying programme by $10bn a month from January. In a statement, finance minister P. Chidambaram said, India is better prepared now to deal with the consequences of a mild tapering by the US Federal Reserve than it was earlier this year. Markets have already factored in the decisions of the US Federal Reserve.

Rubber prices on Tokyo Commodity Exchange fluctuated near a three-month high as the U.S. Federal Reserve starts its two-day meeting and amid speculation that Chinese buyers will boost purchases before Thailand restarts export fees on shipments from January after a four-month exemption. Prices touched ¥287.9 a kg on Monday, the highest intra-day level since 9th September 2013.

On Wednesday, RSS4 grade closed at `.153 a kg at Kottayam. While today on National Multi Commodity Exchange January 2014 futures were trading at `.157.65 a kg, February at `.159.86 and March at `.162.66 a kg, at 13.20 IST. RSS3 grade closed at `.159.65 a kg at Bangkok, while Malaysian SMR20 closed at `.142.87 a kg. Tokyo Commodity Exchange, December futures series closed at ¥285 a kg, January 2014 at ¥279.8, February at ¥278, March at ¥278.1, April at ¥278.7 and the contract for delivery in May 2014 at ¥280.6 a kg.

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Boosting the sentiments

The Reserve Bank of India (RBI) surprised markets by leaving its key lending rate unchanged, despite the fact that retail inflation in November accelerated to 11.24%. The RBI said it would act if food prices don't soften as expected in the coming months and reduce the overall level of inflation. RBI will announce its next monetary policy on 28th January 2014. Acknowledging the industrial downturn, Union minister Sachin Pilot said that the government has taken several measures such as liberalisation of FDI policy and the new Companies Act to uplift the overall business sentiment, boost investment and strengthen the industry.

The Delaware Supreme Court rejects Cooper’s appeal to force Apollo Tyres to complete its proposed acquisition. The Findlay, Ohio-based Cooper Tire and Rubber Co. have only a slim chance to keep Apollo from walking away from the long-pending and controversial deal. Apollo Tyres Ltd., which would become the world’s seventh biggest tyre maker if the deal is completed.

On Wednesday, Tokyo Commodity Exchange, December futures series closed at ¥283 a kg, January 2014 at ¥277.8, February at ¥276, March at ¥276.4, April at ¥278.1 and the contract for delivery in May 2014 at ¥280.1 a kg. While National Multi Commodity Exchange January 2014  futures were trading at `.157.70 a kg, February 2014 at `.160 a kg and March at `.162.75 at 12.45 IST. RSS3 grade closed at `.160.65 a kg at Bangkok, while Malaysian SMR20 closed at `.143.18 a kg.

What our readers say: http://rubber4u.com/Public/Views.pdf

Read lot more in Rubber4U – 1st January 2014 issue

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Rubber4U - 15th December 2013 issue

Industrial production declines

India's industrial output contracted for the first time in four months. Industrial production growth fell to 1.8% y-o-y in October 2013 from 2% y-o-y in September. The decline was due to falling production in the country's mining and manufacturing industries. Consumer price index inflation rose to 11.2% y-o-y in November from 10.2% in October. In this scenario, it is expected that Reserve Bank of India may hike the repo rate. Companies complain that rising borrowing costs are making it harder for them to expand.

The Communist Party of India (Marxist) would organise a protest campaign across Kottayam district on 16, 17 & 18th December, against the indifference of Central and State governments towards the problems faced by rubber growers in Kerala.

Tocom’s upward trend and producers to cut output

Between August 2012 and March 2013, Thailand, Indonesia and Malaysia adhered to a pact to cut natural rubber shipments by 300,000 tonnes. Now, Indonesian Rubber Association chairman had sent a letter to Gapkindo members urging them to reduce natural rubber production in 2014, in an effort to shore up prices.

The question raised is that what are the chances of one national organisation getting all those producers to cut production? But this time it is an advance beginning and could be a different story as month’s progresses.

Due to massive purchases from China and optimism that the global economy is rebounding, has pushed up the rubber prices. On Tuesday, Bridgestone bought SIR20 at US$2.32 to $2.33 a kg, without freight for February delivery. Bridgestone may be chasing more Indonesian grade. The market is showing signs of a partial recovery and it is expected that prices to firm up. Today, Tokyo Commodity Exchange rubber futures contract for May delivery hit a high of ¥285.5 a kg and later it closed at ¥284.1 a kg.

Growers are expected not to sell the produce as they usually hold their stocks during December and January if the prices rule low. According to the Rubber Board of India, country's natural rubber production in 2013-14 will be 870,000 tonnes. On the other hand, according to growers production is likely to be around 800,000 tonnes.

Import declines as global prices moves up

Tokyo Commodity Exchange rubber futures contract for May delivery hit a 2-1/2 month peak of on 10^th December 2013 as the yen weakened, although the contract later eased as it came under pressure from declining oil prices and today it closed at ¥279.7 a kg.

According to Rubber Board of India, country's natural rubber imports fell 4.57% on the year in November to 22,872 tonnes, as tyre manufacturers reduced international purchases after prices in local market declined to their lowest level in more than three years.

RSS4 grade closed at `.151 a kg at Kottayam, while National Multi Commodity Exchange December futures were trading at `.152.25 a kg, January 2014 at `.154.74 and February at `.157.05 a kg at 16.05 IST. RSS3 grade closed at `.157.47 a kg at Bangkok and Malaysian SMR20 closed at `.142.95 a kg. Tokyo Commodity Exchange, December futures series closed at ¥274.9 a kg, January 2014 at ¥273.2, February at ¥273.5, March at ¥274.9, April at ¥277.4 and the contract for delivery in May 2014 at ¥279.7 a kg.

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Read lot more in Rubber4U – 15th December 2013 issue

Ban import or suspend DFI

Rubber Board executive committee members met to discuss issues related to rubber price, demanded a ban on rubber import or if that was not possible then the government should temporarily suspend duty free import. Another suggestion raised in the meeting was to raise the import duty to 25% without imposing any cap on the maximum limit and also suggested that the purchase tax of 5% levied by the Kerala government be reduced. The members also urged the central and state governments to implement a scheme for joint procurement of rubber.

Rubber advance on speculation that improving U.S. economic data may bring forward stimulus cuts and China may step up purchases for its state reserves. On Friday, Tokyo Commodity Exchange, December futures series closed at ¥267.9 a kg, January 2014 at ¥267.8, February at ¥270, March at ¥271, April at ¥273.9 and the contract for delivery in May 2014 at ¥275.8 a kg. While National Multi Commodity Exchange December futures were trading at `.152.84 a kg, January 2014 at `.154.57 a kg and February at `.157 at 12.30 IST. RSS3 grade closed at `.157.53 a kg at Bangkok, while Malaysian SMR20 closed at `.142.35 a kg.

Feeling the pinch

The growers started to feel the pinch, as downward trend in the domestic rubber prices continued due to lack demand and over supply. The growers feels that the prices will slide southward in the coming months. Currently domestic prices are ruling below the international prices. According to the growers another `.5-10 fall from the current level will hit them badly, hence they were demanding for an increase in the import duty on natural rubber.

It is estimated that an upward trend can be expected from mid January 2014.

RSS4 grade closed at `.152 a kg at Kottayam, while National Multi Commodity Exchange December futures closed at `.152.81 a kg, January 2014 at `.154.81, February at `.157.19 and March at `.162.39 a kg. RSS3 grade closed at `.159.14 a kg at Bangkok and Malaysian SMR20 closed at `.145.17 a kg. Tokyo Commodity Exchange, December futures series closed at ¥262 a kg, January 2014 at ¥266, February at ¥268.1, March at ¥269.6, April at ¥272.3 and the contract for delivery in May 2014 at ¥274.5 a kg.

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Apollo’s transaction with SRI

Apollo Tyres Ltd has closed the transaction with Sumitomo Rubber Industries (SRI), where in SRI takes over Apollo Tyres South Africa including the Ladysmith passenger car tyre plant and Dunlop brand rights in 32 countries of Africa for US$ 60 million. Apollo retains the Durban plant which manufactures Truck & Bus radial tyres and Off Highway tyres used in the mining and construction industries. Post this transaction, Apollo Tyres will continue to sell Apollo, Vredestein and Regal branded tyres in Africa. Both companies will also undertake contract manufacturing of their respective brands at each other’s facility to have locally manufactured products available for the market.

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Read lot more in Rubber4U – 15th December 2013 issue

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