Rubber4U

Rubber4U - 1st May 2014 Issue

Price at forecasted level

Has the market recovered for a fall?

Further softening in natural rubber prices which fell to `.138 per kg on 22nd April, from the `.163.50 a kg on 1st January 2014. Weak international rubber prices along with high imports and muted off take in domestic markets have been the reasons behind the fall in rubber prices. Physical rubber prices improved on Monday. The market gained strength mainly on covering purchases as sellers stayed away expecting a short term recovery in the commodity.

Today, the benchmark RSS4 grade rubber closed at `.139.50 a kg at Kottayam. RSS3 grade closed at `.127.11 a kg at Bangkok and Malaysian SMR20 closed at `.104.39 a kg. On Tokyo Commodity Exchange, May 2014 futures series closed at ¥204.3 a kg, June at ¥208, July at ¥207.6, August at ¥208.2, September at ¥207.4, and the contract for delivery in October 2014 closed at ¥206.3 a kg. On National Multi Commodity Exchange, May 2014 futures closed at `.142.16 a kg, June at `.145.01, July at `.145.87 and August at `.143.73 a kg. Rubber Mini contract for May 2014 closed at `.140.80 and June at `.143.77 a kg.

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Is price heading towards Rs.130 a kg mark

Global natural rubber production will continue to outpace demand over the next two years. World output may rise 1.1% to 12.2 million tonnes this year against consumption of 11.5 mn tonnes. International prices continue to slide and expected to remain under pressure in near future, as global natural rubber surplus this year will be 78% higher than estimated as demand growth weakens and production in Thailand surpasses forecasts.

In a statement, Thailand’s government has informed the International Rubber Consortium Ltd. that Thai government has not made any decision to sell its current natural rubber stocks at prevailing market prices. The government will only consider selling them if the market price of natural rubber is appropriate.

Today, the benchmark RSS4 grade rubber closed at `.138 a kg at Kottayam. RSS3 grade closed at `.123.51 a kg at Bangkok and Malaysian SMR20 closed at `.102.15 a kg. On Tokyo Commodity Exchange, April 2014 futures series closed at ¥196 a kg, May at ¥198.9, June at ¥200.5, July at ¥200.5, August at ¥201.1 and the contract for delivery in September 2014 closed at ¥201.6 a kg. On National Multi Commodity Exchange, May 2014 futures were trading at `.138.50 a kg, June at `.140.60, July at `.141.60 and August at `.141.44 a kg. Rubber Mini contract for May 2014 was trading at `.139.75 and June at `.140 a kg, at 16.15 IST.

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RIL inaugurates ECSC and rubber price continues down trend

Relflex Elastomers, the synthetic rubber business unit of Reliance Industries Ltd. inaugurated a customer support centre (ECSC) at its petrochemicals complex in Vadodara in Gujarat. Relflex ECSC would serve as a springboard for mutual collaborative efforts, value additions and joint product development between Relflex Elastomers and its customers. Reliance Elastomer supplies Polybutadiene Rubber (PBR) to tyre as well non-tyre industry.

The domestic natural rubber prices dropped to their lowest level in more than four years, following drop in overseas prices and on sluggish demand. Lower prices would bring down raw material costs for tyre makers, thereby boosting their profitability. The spot price of the most traded RSS-4 rubber at the Kottayam market dropped to `.140 per kg, the lowest level since 20th February 2010. RSS3 grade closed at `.128.88 a kg at Bangkok and Malaysian SMR20 closed at `.104.70 a kg. On Tokyo Commodity Exchange, April 2014 futures series closed at ¥201.7 a kg, May at ¥201, June at ¥201.7, July at ¥201.3, August at ¥201.4 and the contract for delivery in September 2014 closed at ¥201.4 a kg. On National Multi Commodity Exchange, April 2014 futures were trading at `.138.15 a kg, May at `.138.09, June at `.140.51, July at `.140.76, August at `.148.60, September at `.150.60 and October at `.152.60 a kg. Rubber Mini contract for May 2014 at `.139.25 a kg.

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Rubber4U

Rubber4U - 15th April 2014 issue

Market sluggish, indicates down trend

The dry season, which curbs output in Thailand, Indonesia and Malaysia, has failed to support prices, with rubber futures in Tokyo and Singapore holding near multi-year lows on fears about economic growth in top consumer country. While some Chinese buyers may want to buy on dips, overall demand is still weak due to the high inventory in warehouses monitored by the Shanghai Futures Exchange.

India’s natural rubber imports jumped 49.3% to 324,467 tonnes in 2013-14, while production fell 7.6% to 844,000 tonnes and consumption was largely steady at 977,400 tonnes, compared with 972,705 tonnes in 2012-13.

Today, the benchmark RSS4 grade rubber closed at `.145 a kg at Kottayam. RSS3 grade closed at `.136.84 a kg at Bangkok and Malaysian SMR20 closed at `.109.49 a kg. On Tokyo Commodity Exchange, April 2014 futures series closed at ¥223.5 a kg, May at ¥223.5, June at ¥220.7, July at ¥215.6, August at ¥214.5 and the contract for delivery in September 2014 closed at ¥213.7 a kg. On National Multi Commodity Exchange, April 2014 futures closed at `.142.96 a kg, May at `.145.18, June at `.148.03 and July at `.148.43 a kg. Rubber Mini contract for May 2014 closed at `.144.70 a kg.

Prices could be under pressure as main producer Thailand plans to sell 200,000 tonnes of rubber from state inventory to replace lost output as farmers stop tapping trees during the dry season. There are a lot of inquiries from China, but their bids are below $2 a kg.

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Mini contracts from May

Forward Markets Commission has permitted National Multi Commodity Exchange (NMCE) to launch rubber mini contracts for up to 5 tonnes from next month to increase the participation of small traders. Currently, NMCE offers futures trading in rubber contracts with a maximum trading unit of 100 tonnes.

Today, the benchmark RSS4 grade rubber closed at `.148 a kg at Kottayam. RSS3 grade closed at `.137.89 a kg at Bangkok and Malaysian SMR20 closed at `.111.80 a kg. Malaysian rubber prices trading at low level following a statement by the Thai Agriculture Minister Yukol Limlaemthong that the Thai Government is planning to sell its 200,000 tonnes of rubber stockpile. On Tokyo Commodity Exchange, April 2014 futures series closed at ¥248.8 a kg, May at ¥250.1, June at ¥229.7, July at ¥224.6, August at ¥224 and the contract for delivery in September 2014 closed at ¥223.1 a kg. On National Multi Commodity Exchange, April 2014 futures were trading at `.145.40 a kg, May at `.149.28, June at `.151.30 and July at `.152.90 a kg.

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Policy rates unchanged & Govt approves NPoR

Disappointed with the Reserve Bank's decision to hold a key interest rate, Chandrajit Banerjee, director general of CII said at a time when growth impulses remain weak and WPI inflation has been on a declining trajectory for the last nine months, the RBI should have announced a cut in policy rates which would stimulate demand and kick-start the investment cycle.

The markets now are anticipating a stable government and rapid policy actions.

The Indian government has agreed to help implement National Policy on Rubber (NPoR) developed by the All India Rubber Industries Association (AIRIA) and has advised all rubber industry stakeholders to come together to implement the NPoR, according to the AIRIA.

AIRIA looks forward to inputs from the industry as it takes unto itself to direct and provide opportunities for growth for this perceived Sunrise Sector. The multifaceted policy includes plans to create an indigenous ecosystem in India for natural rubber; to promote cutting-edge research and development in rubber; to attract investment; to make India’s rubber industry the most technologically advanced in the world; to increase both production and consumption of rubber; and to increase productivity, quality and employment.

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