Rubber4U

Rubber4U - 1st February 2014 issue

Rubber reaching our IRC 2010 forecast target

Natural rubber prices dropped to their lowest level in nearly four years on more than enough supplies and also due to drop in international prices. The benchmark RSS4 grade rubber closed at `.142 a kg at Kottayam. RSS3 grade closed at `.135.21 a kg at Bangkok and Malaysian SMR20 closed at `.120.17 a kg. At IRC 2010, Rubber4U has put up a forecast banner on Production, Consumption and also about the future Price.

Govt considering rubber procurement

Kerala government is actively considering procurement of rubber, for stabilization of rubber prices. The demand for hiking the import duty was heard only in the end of December 2013. The state had demanded reinstatement of port restrictions for rubber imports and granting of export subsidy.

Kerala Chief Minister Oommen Chandy said that increasing of import duty for rubber had resulted in a rise in domestic price of `.10 per kg for a few days, but with the fall in international price, the effect was taken away. I have written to the Centre to grant `.100 crore from the Price Stabilisation Fund of the Union Commerce Ministry. The government is seriously considering steps to go in for procurement of rubber.

On Wednesday, the benchmark RSS4 grade rubber closed at `.145 a kg at Kottayam. RSS3 grade closed at `.138.82 a kg at Bangkok and Malaysian SMR20 closed at `.124.81 a kg. On Tokyo Commodity Exchange, February 2014 futures series closed at ¥225 a kg, March at ¥224.9, April at ¥226.5, May at ¥229.2, June at ¥231.5 and the contract for delivery in July 2014 closed at ¥232.5 a kg. While on National Multi Commodity Exchange, February 2014 futures closed at `.145.08 a kg, March at `.147.40, April at `.150.38 and May at `.152.19 a kg.

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

Hike in interest rate

Dr. Raghuram Rajan has surprised the market in the all the three policy reviews ever since he took over as the RBI chief in September 2013. He had hiked rates twice by 0.25% to tame soaring prices. But in the last monetary policy review on 18th December, Dr Rajan kept the key policy rates unchanged despite retail inflation accelerating to a record high of 11.24% in November 2013 and wholesale inflation surging to 7.52%, the highest in 14 months. The wholesale price index slipped to five month low of 6.16% in December, which is still above the RBI's commonly perceived comfort level of 5%.

Despite the fall in inflation, Reserve Bank of India unexpectedly raised its policy repo rate by 25 basis points to 8%. Banks are expected to hike their lending rates after the RBI's surprise move. Rate hike will set economy on the disinflationary path.

On Monday, the benchmark RSS4 grade rubber closed at `.148 a kg at Kottayam. Today, RSS3 grade closed at `.138.14 a kg at Bangkok and Malaysian SMR20 closed at `.127.81 a kg. Tokyo Commodity Exchange, February 2014 futures series closed at ¥220 a kg, March at ¥220.6, April at ¥222, May at ¥224.5, June at ¥226.7 and the contract for delivery in July 2014 closed at ¥228.1 a kg. While on National Multi Commodity Exchange, February 2014 futures were trading at `.140.80 a kg, March at `.142.97, April at `.146.10 and May at `.150 a kg, at 12.10 IST.

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

Don’t expect much in next week

The Reserve Bank of India (RBI) is scheduled to announce third quarter review of monetary policy on 28th January and is likely to maintain status quo in its monetary policy. RBI may retain the repo rate in this review even though inflation eased in December. After hiking policy rate in two consecutive policies, RBI kept key policy rates unchanged on 18th December review on expectations that wholesale and retail inflation would ease.

The Rupee, which fell sharply against the dollar on 24th January, is expected to continue its weak run next week due to the month end dollar demand, especially from oil marketing companies, coupled with global economic uncertainties. 

Global markets are facing pressure from excess supply and low demand, due to which domestic rubber futures are also moving in tandem with the international market. Duty free imports of rubber under the advance licence scheme may continue to put pressure on domestic prices. On Friday, the benchmark RSS4 grade rubber closed at `.150.50 a kg at Kottayam. RSS3 grade closed at `.142.89 a kg at Bangkok and Malaysian SMR20 closed at `.132.47 a kg. Tokyo Commodity Exchange, January 2014 futures series closed at ¥248 a kg, February at ¥243.4, March at ¥237.6, April at ¥238.1, May at ¥240 and the contract for delivery in June 2014 closed at ¥241.5 a kg. While National Multi Commodity Exchange February 2014 futures closed at `.148.20 a kg, March at `.150.51, April at `.154.02 and May at `.156.50 a kg, on Saturday.

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

Happy Republic Day

AITDF to explain its case before CCI

Tyre manufacturers increased tyre prices when the natural rubber prices were moving northward. Currently, rubber prices on its downward trend, has forced the All India Tyre Dealers Federation (AITDF) to demand a cut in tyre prices. In a letter to Competition Commission of India (CCI), AITDF said that the domestic tyre companies raised prices when natural rubber prices went up, but had not reduced the prices when the prices came down. Representative of AITDF will be appearing before the CCI on 18th February to explain its case.

On Monday, the benchmark RSS4 grade rubber in India closed at `.150.50 a kg at Kottayam. Today, RSS3 grade closed at `.145.25 a kg at Bangkok and Malaysian SMR20 closed at `.133.93 a kg. Tokyo Commodity Exchange, January 2014 futures series closed at ¥262 a kg, February at ¥259.3, March at ¥247.7, April at ¥247.7, May at ¥249 and the contract for delivery in June 2014 closed at ¥249.6 a kg. While National Multi Commodity Exchange February 2014 futures trading at `.153.19 a kg, March at `.155.75, April at `.159.10 and May at `.161.01 a kg, at 13.25 IST.

Read lot more in Rubber4U – 1st February 2014 issue

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

Growth in auto sector may create acute shortage in NR supply

Natural rubber production fell 10% to 627,000 tonnes in April-December 2013 period. Heavy rains from July to September cut latex output. The actual output is expected to be lower than the reported figure and this can be seen by the tightness in supply in the domestic market even though consumption hasn’t grown much. Natural rubber imports will surge to a record this year after monsoon rains cut production.

Consumption of natural rubber dropped 2% to 728,080 tonnes, during April-December 2013 period. Despite the depressed demand scenario, the supply-demand gap continues. Tyre companies accelerated imports after prices dropped in producing countries. Imports jumped 53% to 264,576 tonnes during April-December 2013 and is expected reach a record high during 2013-14.

Rubber stored in bonded warehouses in China's Qingdao port rose 5% to nearly 300,000 tonnes in December, raising fears that China could cut purchases in coming months, which is affecting sentiment. While supply is basically okay in Thailand, and production is still at its peak. Things could worsen in Thailand, where protesters trying to unseat the government are camped in central Bangkok.

Indian automobile sector, which consumes 65% of the rubber, a slowdown in automobile sales may weaken demand for tyres. Since 1st January 2014, the benchmark RSS4 grade rubber in India fell 8.25% to `.150 a kg at Kottayam, while RSS3 grade closed at `.144.93 a kg at Bangkok and Malaysian SMR20 closed at `.135.19 a kg. National Multi Commodity Exchange February 2014 futures closed at `.151.75 a kg, March at `.154.11, April at `.157.95 and May at `.160.38 a kg. Tokyo Commodity Exchange, January 2014 futures series closed at ¥264.2 a kg, February at ¥261.6, March at ¥251.5, April at ¥250.4, May at ¥252.1, and the contract for delivery in June 2014 closed at ¥253 a kg.

Read lot more in Rubber4U – 1st February 2014 issue

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

Rubber4U - 15th January 2014

Rubber4U - 15th January 2014 issue

Economy to grow, while NR output to drop

8The growth data from the US has been very positive and the third quarter number came in at a more than expected 4.1% q-o-q annualised. This robust US growth will support the global economic recovery and as a relief to remove uncertainty from the markets. India, on the other hand, is going through a challenging macro-economic environment as it heads into election year in 2014. Reserve Bank of India has been fine-tuning its policies to prop-up growth and curb inflation. India's growth level this fiscal will probably remain at 5%.

During April-December 2013 period, the production of natural rubber has fallen more than 10% to 627,000 tonnes, compared to 697,200 tonnes during the same period of 2012. Consumption during April-December 2013 period dropped to 728,080 tonnes, compared to 742,480 tonnes in the April-December 2012. Natural rubber imports shot up to 264,576 tonnes in the April-December 2013, as against 173,441 tonnes in the same period of 2012.

The bad trend in production might seriously affect the availability of natural rubber over the next few months and Rubber Board sources said that the total production will be confined to 870,000 tonnes. According to growers, production is likely to drop to 800,000 tonnes according to the current trend.

Today, RSS4 grade closed at `.152 a kg at Kottayam, while RSS3 grade closed at `.147.26 a kg at Bangkok and Malaysian SMR20 closed at `.136.41 a kg. National Multi Commodity Exchange January 2014 futures closed at `.152.84 a kg, February at `.154.96, March at `.157.74, April at `.162.05 and May at `.164.37 a kg. On Friday, Tokyo Commodity Exchange, January 2014 futures series closed at ¥265.3 a kg, February at ¥264.4, March at ¥257.5, April at ¥256.4, May at ¥256.3, and the contract for delivery in June 2014 closed at ¥256.3 a kg. On Tuesday, most probably market will be in red and the possibility is that contract for delivery in June may touch a low of  ¥248 a kg mark.  

Read lot more in Rubber4U – 15th January 2014 issue

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