Rubber4U

Rubber4U - 1st March 2014 issue

Rubber imports to cross 3 lakh tonnes

India’s natural rubber imports will rise by 47% to touch a new all-time high of 3.2 lakh tonnes in 2013-14, compared to 2.17 lakh tonnes registered in 2012-13. According to a senior rubber board official, natural rubber import contracts were made during June to October period, when the prices in the international market were down by `.35 per kg, compared to domestic prices. Till last week, the inward shipments of natural rubber were at 2.9 lakh tonnes.

On Thursday, the benchmark RSS4 grade rubber closed at `.147 a kg at Kottayam. RSS3 grade closed at `.132.77 a kg at Bangkok and Malaysian SMR20 closed at `.112.70 a kg. On Tokyo Commodity Exchange, March 2014 futures series closed at ¥215.3 a kg, April at ¥217.7, May at ¥220.5, June at ¥220.2, July at ¥218.5 and the contract for delivery in August 2014 closed at ¥218.2 a kg. On Wednesday, National Multi Commodity Exchange, March 2014 futures closed at `.147.41 a kg, April at `.151.48, May at `.154.72, June at `.155.61, and July at `.156.30 a kg.

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Rubber to stay under pressure

China’s GDP grew by 7.7% in line with last year and in 2014, consumption of natural rubber in China could grow by 6.7% to 3.95 million tonnes, while synthetic rubber demand is expected to rise by 6.35% to 4.35 million tonnes, as an expansion in auto industry will boost demand from tyre. But continuing slowdown in the European and US economies apart, Chinese withdrawal from the global market had fuelled the current fall in natural rubber price. Global prices of natural rubber are likely to stay under pressure in the coming days due to increasing supply.

Yesterday, RSS4 grade at Kottayam closed at `.148 a kg, while National Multi Commodity Exchange, March 2014 futures closed at `.147.08 a kg, April at `.152.07, May at `.155.03, June at `.155.93 and July at `.154.87 a kg. On Friday, the benchmark RSS3 grade closed at `.136.19 a kg at Bangkok, while Malaysian SMR20 closed at `.119.12 a kg. Futures on the Tokyo Commodity Exchange, February 2014 futures series closed at ¥218.8 a kg, March at ¥222.3, April at ¥223.7, May at ¥226.5, June at ¥227.2 and the contract for delivery in July 2014 closed at ¥226.9 a kg.

Around 700 delegates from 30 countries have participated in India Rubber Meet 2014 and the next meet is scheduled to be held in Kochi, in March 2015.

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Market down, while IRM 2014 in progress

Today, the first meeting of the ‘India Rubber Meet 2014’ is being inaugurated by Vikram Srikant Kirloskar, President of the Society of Indian Automobile Manufacturers and Vice chairman of Toyota Kirloskar Motor Pvt. Ltd. at Hotel Le-Meridien Convention Centre, Kochi-Kerala, with a theme ‘Indian Rubber: New Horizons’. Global economic and rubber scenario, Chinese rubber sector, developments in artificial rubber, new trends in automobile and tyre industries are subjects which will be discussed at the event.

India's natural rubber production as well as consumption declined during April 2013 to January 2014 period. Natural rubber production was 9.4% lower and consumption 0.9% lower, compared to the same period in 2012-2013.

Rubber reserves in China almost doubled in the past six months and rising stockpiles signal ample supply from producer nations. The outlook for this market now with huge volumes of inventory seems to be bear market and is poised to deepen as the global surplus may be as much as 241,000 tonnes in 2014, extending the glut to a fourth year and stockpiles swell. Vehicle demand in China is slowing as anti-pollution and austerity campaigns spread.

Yesterday RSS4 grade at Kottayam closed at `.152.50 a kg. Today, the benchmark RSS3 grade closed at `.137.36 a kg at Bangkok, while Malaysian SMR20 closed at `.121.20 a kg. Futures on the Tokyo Commodity Exchange today dropped by the most and is expected to drop further down in short term. February 2014 futures series closed at ¥220 a kg, March at ¥219.2, April at ¥221.5, May at ¥223.9, June at ¥224.8 and the contract for delivery in July 2014 closed at ¥224.4 a kg. While on National Multi Commodity Exchange, March 2014 futures trading at `.149.22 a kg, April at `.153.57, May at `.156, June at `.157.55 and July at `.158.77 a kg, at 12.15 IST.

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Read lot more in Rubber4U – 1st March 2014 issue

Interim Budget 2014-15

While presenting the Interim Budget 2014-15 in the parliament, finance minister P Chidambaram proposed no major changes in tax laws, slashed the excise duty from 12% to 10% on capital goods.

Current account deficit will be contained at 4.6% to US$ 45 billion for 2013-14, which is well below the record high level of 2012-13 and exports are likely to increase 6.4% to US$ 326 billion in 2013-14. GDP growth has improved and will be 4.9% for 2013-14. The Finance Minister expects to add about US$ 15 billion to the foreign exchange reserves by the end of financial year.

Interim Budget 2014-15 Highlights related to rubber & allied industry

Taxation

-No changes proposed in the tax laws

-Excise duty to be cut by 2% for Capital Goods & Consumer Durables

To give relief to the automobile industry, which is registering unprecedented negative growth

-Excise duty reduced for small cars from 12% to 8%

-Excise duties reduced on larger cars to 20%-24% from 24%-27%.

-Excise duty reduced for SUVs from 30% to 24%

-Excise duties on bikes/2 wheelers down to 8%

 Other

-India’s economy at 11th position globally, aims to be third

-Aim at fiscal deficit of 3% by 2016-17

-Govt to strengthen regulatory laws governing commodities

-Proposal to amend the Forwards Contracts Regulation Act

-Skill development should be promoted

The full Budget for 2014-15 will be presented by the new government in June-July.

                                                                                                                          

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Read lot more in Rubber4U – 1st March 2014 issue

Rubber4U

Rubber4U - 15th February 2014 issue

Rubber starts its upward move

Manufacturing, which has a weight of over 75% in the Index of Industrial Production, continued to decline in December 2013. Its output decreased 1.6% in the month as against a 2.6% fall in November. Manufacturing was down 0.8% in December 2012.

Railway Minister Mallikarjun Kharge will not bring about reduction in basic passenger fares, but is likely to make adjustment in fuel adjustment component so that impact on fares is minimum. Kharge is likely to announce more trains, new lines and better passenger amenities in the interim budget.

In January 2014, India's car sales dropped 7.6% to 160289 vehicles, compared to January 2013, according to the Society of Indian Automobile Manufacturers. The sales have fallen more than 5% so far this fiscal year. Sales of passenger vehicles, which include cars and utility vehicles, dropped nearly 9% in January.

The Cabinet Committee on Economic Affairs has approved the continuation of the 'Sustainable and Inclusive Development of Natural Rubber Sector' scheme with an outlay of `.960 crore in 12th plan 2012-17. The scheme was approved with some modification as recommended by the Expenditure Finance Committee. The aim of the scheme is to enhance natural rubber production and productivity.

The benchmark RSS4 grade rubber closed at `.147 a kg at Kottayam, while RSS3 grade closed at `.133.83 a kg at Bangkok and Malaysian SMR20 closed at `.121.51 a kg. On Tokyo Commodity Exchange, February 2014 futures series closed at ¥221.1 a kg, March at ¥221.3, April at ¥224, May at ¥226.2, June at ¥227.5 and the contract for delivery in July 2014 closed at ¥227.6 a kg. While on National Multi Commodity Exchange, February 2014 futures closed at `.147.94 a kg, March at `.150.97, April at `.155.68, May at `.158.06 and June at `.159.63 a kg.

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Positive move

Rubber prices on SICOM exchange are trading close to their weakest level, while Indonesia's SIR20 is trading around its lowest in five years. The International Rubber Consortium (IRCo) has recommended its members not to sell natural rubber at the current low level prices. IRCo is of opinion that current prices are unreasonably low and would advise its member countries to jointly encourage their respective association members not to offer natural rubber at prevailing low prices. Today most of the market closed with a positive note.

The benchmark RSS3 grade closed at `.131.11 a kg at Bangkok, while Malaysian SMR20 closed at `.117.78 a kg. On Tokyo Commodity Exchange, February 2014 futures series closed at ¥222 a kg, March at ¥222.7, April at ¥223.9, May at ¥226.6, June at ¥228.1 and the contract for delivery in July 2014 closed at ¥228.2 a kg. While on National Multi Commodity Exchange, February 2014 futures trading at `.147.01 a kg, March at `.150.01, April at `.154.10, May at `.156.01 and June at `.155.30 a kg, at 14.00 IST.

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GDP growth pegged at 4.9% & NR moves up

Last year, Finance Minister P. Chidambaram had projected an estimated GDP growth of 6.1-6.7% for 2013-14 in his annual budget, but lately lowered the estimates to around 5%. Today, the government pegged the economic growth rate for 2013-14 at 4.9% against 4.5% in 2012-13. The growth is projected to be marginally lower than the finance ministry's estimated growth.

The three Southeast Asian natural rubber producers are considering joint action to support prices, as tyre grades dip to five year low on worries about a slowing economy in China. They are examining whether to curb exports; reduce tapping or buy rubber from farmers. Indonesia has already urged its farmers to reduce tapping. Thailand and Malaysia could opt for export and output cuts. The representatives from Indonesia, Thailand and Malaysia are meeting this month to work out a deal.

The benchmark RSS4 grade rubber closed at `.144 a kg at Kottayam, while RSS3 grade closed at `.130.98 a kg at Bangkok and Malaysian SMR20 closed at `.116.35 a kg. On Tokyo Commodity Exchange, February 2014 futures series closed at ¥217.8 a kg, March at ¥218.2, April at ¥218.8, May at ¥220.3, June at ¥221.9 and the contract for delivery in July 2014 closed at ¥222.2 a kg. While on National Multi Commodity Exchange, February 2014 futures closed at `.144.43 a kg, March at `.146.69, April at `.149.05, May at `.151.64 and June at `.153.23 a kg.

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Growers interest to be protected

Today oil prices extended gains in Asian trade as extra cold weather in the United States bolstered the demand for heating fuel. US benchmark West Texas Intermediate crude for March delivery trading at $97.72 at 13.00 IST

In December 2013, India's rubber & rubber articles exports have grown 22.69% to US$214.5 M, compared to November 2013 exports.

Union Minister for Commerce Anand Sharma has assured Kerala Chief Minister Oommen Chandy that his Ministry will take steps to protect the interests of rubber growers, who have been agitating on the steep fall in rubber prices due to imports. The minister has agreed to consider the request of Mr. Chandy to increase the rubber planting subsidy to 30% from the present 20%.

On Tuesday, the benchmark RSS4 grade rubber closed at `.142.50 a kg at Kottayam. Today, RSS3 grade closed at `.134 a kg at Bangkok and Malaysian SMR20 closed at `.119.31 a kg. On Tokyo Commodity Exchange, February 2014 futures series closed at ¥216.6 a kg, March at ¥215, April at ¥215.8, May at ¥218, June at ¥219.5 and the contract for delivery in July 2014 closed at ¥220.5 a kg. While on National Multi Commodity Exchange, February 2014 futures trading at `.146.61 a kg, March at `.149, April at `.151.90 and May at `.153.60 a kg at 13.00 IST

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Read lot more in Rubber4U – 15th February 2014 issue