Rubber4U

Rubber4U - 1st October 2014 issue

Nobody would be ignored

Indian rubber growers have demanded, among other things, a temporary suspension of imports for a period of six months and that import duty on natural rubber be hiked to 30% or `.40 a kg, whichever was higher against the current 20% or `.30 a kg, whichever was lower, to discourage manufacturing industry. While rubber goods manufacturing industry represented by Automotive Tyre Manufacturers’ Association, argued that the import duty rate was the highest in the world.

Kerala Finance Minister K.M. Mani appealed to the Union Government to use money from the Price Stabilisation Fund to support growers who are reeling under a steep fall in the price of natural rubber. He claimed that only `.14 crore of the total of `.1,000 crore available under the Fund had been utilised. He suggested that the Union Government double the current incentive of `.25,000 per hectare to lure more farmers into taking replanting rubber.

Union Minister of State for Commerce and Industry, Nirmala Sitharaman assured stakeholders that a decision on the crisis now gripping rubber growers would be taken without favouritism. Nobody would be ignored and everyone would be taken on board while arriving at a decision in a time-bound manner.

Today, the benchmark RSS4 grade rubber closed at `.121 a kg at Kottayam, while RSS3 grade closed at `.96 a kg at Bangkok and Malaysian SMR20 closed at `.88.79 a kg. On National Multi Commodity Exchange October 2014 futures closed at `.122.80 a kg, November at `.121.43, December at `.120.83 and January 2015 at `.120.52 a kg. On Tokyo Commodity Exchange, October 2014 futures series closed at ¥171.7 a kg, November at ¥175.6, December at ¥178.5, January 2015 at ¥182.5, February at ¥184.4 and the contract for delivery in March 2015 closed at ¥185.4 a kg.

Read lot more in Rubber4U – 1st October 2014 issue

For 2014-15 Rubber Forecast, http://rubber4u.com/Public/RForecast.pdf

Gloomy outlook for plantation sector

The price of rubber remains low despite a low supply. Tokyo rubber futures hit a fresh 5 year low on 24th September on persistent fears of weak demand from China, China economic data was not as good as expected and weak oil prices also weighed on the market.

Thai Democrat Party called on Prime Minister Prayut Chan-o-cha to implement its five point proposal to urgently resolve price crisis facing rubber growers. Deputy leader Nipit Intarasombat said the government was on the right track to address the falling rubber prices, its policies are designed as a long-term solution. It depends on the government to decide if it wants to protect the farmers or the asphalt industry. Promoting use of rubber in road construction will raise costs, but its benefits are greater than shoring up the rubber prices.

The government should establish a policy guaranteeing that rubber is used in road construction and repair projects. The policy should stipulate that the rubber come from fresh supplies, not from the government’s stockpiles.

Prime Minister Gen Prayut thanked the rubber growers for their decision to call off a rally planned on 8th October. He has promised the government will take measures to boost prices, such as promoting the domestic use of rubber products, providing loans to rubber cooperatives and slowing rubber production.

The former Rubber Board Chairman said the production of natural rubber in the country is 8.5 lakh tonnes while the actual demand is about 9.25 lakh tonnes, but the volume of rubber imported was several times more. The excess rubber imported has been stockpiled by the rubber based companies including tyre manufacturers. This has helped them crush the local rubber producers.

A discrepancy of around one lakh tonnes of natural rubber has surfaced in the stock level data provided by rubber board at the end of August month. The industry finds that an anomaly in the calculations will affect all the stakeholders in the sector. Indian Rubber Growers Association has refuted the allegation made by Automotive Tyre Manufacturers Association and other organisations, regarding stock of natural rubber in India. The issue does not carry any relevance at this point of time, when rubber prices are low. The issue of stock was raised by ATMA deliberately to divert attention from core issues that the rubber sector in India is facing.

Prices are likely to go from bad to worse when the rainy season ends. Today, the benchmark RSS4 grade rubber closed at `.120.50 a kg at Kottayam, while RSS3 grade closed at `.96.08 a kg at Bangkok and Malaysian SMR20 closed at `.88.68 a kg. On National Multi Commodity Exchange October 2014 futures closed at `.119.75 a kg, November at `.118.55, December at `.118.67 and January 2015 at `.118.79 a kg. On Tokyo Commodity Exchange, October 2014 futures series closed at ¥166.8 a kg, November at ¥170.6, December at ¥174, January 2015 at ¥177.6, February at ¥179.6 and the contract for delivery in March 2015 closed at ¥180.9 a kg. Tommorrow the market is expected to trade between ¥180 & ¥186 a kg for March contract and most probably may close on higher side.

Read lot more in Rubber4U – 1st October 2014 issue

For 2014-15 Rubber Forecast, http://rubber4u.com/Public/RForecast.pdf

Rubber prices nosedives

The economic slowdown in China followed by sluggish demand, high inventory level, oversupply of natural rubber and drop in the price of synthetic rubber has favoured for a further drop in the price of natural rubber. This trend indicates the poor off take by major consuming countries, hence a prolonged low price regime can be expected.

The United Planters’ Association of Southern India has expressed concern over the declining prices of natural rubber and sought the Centre’s help in resolving the crisis. The prices of RSS-4 grade natural rubber have fallen to `.122 a kg, compared to `.181 a kg as on 23rd September 2013, due to its unrestricted import. Many small growers have stopped tapping operations.

While rubber goods manufacturing industries have expressed concern over the disparity in rubber stock figures. In a communication to the Additional Secretary (Plantations), who is also the Chairman of the Expert Committee to draft the National Rubber Policy, the industry said rubber stock figures at the end of August as released by the Rubber Board show a discrepancy of approximately one lakh tonnes. According to the industry, based on the opening stocks of rubber in April and factoring the key parameters of production, consumption, import and export, the closing stock ought to have been 2.85 lakh tonnes at the end of August. The discrepancy of one lakh tonnes is huge and has significant consequences for all stakeholders.

Natural rubber prices nosedived in various global markets today on account of poor demand and oversupply of the commodity. The benchmark RSS4 grade rubber closed at `.122 a kg at Kottayam, while RSS3 grade closed at `.97.26 a kg at Bangkok and Malaysian SMR20 closed at `.88.84 a kg. On National Multi Commodity Exchange October 2014 futures were trading at `.117.74 a kg, November at `.117.50, December at `.117.79 and January 2015 at `.117.90 a kg, at 16.00 IST. On Tokyo Commodity Exchange, September 2014 futures series closed at ¥168 a kg, October at ¥172.2, November at ¥175.2, December at ¥178.5, January 2015 at ¥181.7 and the contract for delivery in February 2015 closed at ¥183.5 a kg.

Read lot more in Rubber4U – 1st October 2014 issue

For 2014-15 Rubber Forecast, http://rubber4u.com/Public/RForecast.pdf

Rubber summit in the wake of panic

In the wake of global economic slowdown and the slump in the auto and tyre sector, the global rubber industry leaders and experts will arrive in Kochi tomorrow to participate in the Indian Rubber Summit and Dinner (IRSD 2014) to be held at Hotel Crowne Plaza, Kochi-Kerala. The theme of the event is ‘Rubber Industry - Taking on Challenging Times’. A major feature of the event is the presentation of prestigious ‘Rubber Man of the Year 2014’ awards to Neeraj Kanwar, vice-chairman and managing director of Apollo Tyres Ltd., as outstanding performers in the rubber industry. The event is organised by Rubber Asia, in association with Rubber Board of India and All India Rubber Industries Association.

The Kerala government’s efforts to drive the market higher have failed and now rubber growers want only a result oriented programme to get a remunerative price for their produce, as rubber prices dropped to levels of `.120 a kg (Forecasted by Rubber4U in 15th August 2014 issue). Rubber growers are panicking and will not hesitate to shift to other crops that will be more profitable. The growers are reluctant to continue tapping as returns for them are low even as labour costs remain high.

Read lot more in Rubber4U – 1st October 2014 issue

For 2014-15 Rubber Forecast, http://rubber4u.com/Public/RForecast.pdf

Rubber prices climbs back

Thai government claimed it sold half the country's rubber stockpile, which is about 1.6% of annual global rubber production. Thai government officials said they are in talks with three potential buyers over selling the rest of the stockpile.

Soft loans and cheap fertilizer to farmers is not enough, hence, Thailand rubber growers demand stockpile sale probe and threaten protests. But the government panel agreed today to expedite subsidy payments to rubber farmers in exchange for them dropping planned street protests. The subsides constitute the last 10% of a 30 billion baht package approved earlier to aid farmers, who have been hit hard by tumbling rubber prices. Thailand's huge stockpile of rubber has pushed down prices and the industry needs reform if the market is to rebound.

The Kerala plantation industry has taken strong exception of the government’s decision to enhance plantation tax by 100% and land tax by 150%, at a time when the industry is going through a tough time. The move would affect the industry badly, as the prices of rubber have been falling drastically. Gilbert Dsouza, president of Association of Planters of Kerala said there is a mismatch between the high cost of production and price realization and this has created a serious cash flow position to the plantation industry.

Major rubber consumers continued to stay away from the domestic market, while rubber prices managed to regain strength on covering purchases at lower levels.

The benchmark RSS4 grade rubber closed at `.124 a kg at Kottayam, while RSS3 grade closed at `.100.73 a kg at Bangkok and Malaysian SMR20 closed at `.93.32 a kg. On National Multi Commodity Exchange October 2014 futures closed at `.120.61 a kg, November at `.120.44, December at `.120.52 and January 2015 closed at `.121.08 a kg. On Tokyo Commodity Exchange, September 2014 futures series closed at ¥176 a kg, October at ¥178.6, November at ¥181.6, December at ¥185.2, January 2015 at ¥187.6 and the contract for delivery in February 2015 closed at ¥189.2 a kg.

Read lot more in Rubber4U – 1st October 2014 issue

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

Start of consolidation period

Inflation fell sharply to a nearly five-year low at 3.74% in August 2014, as compared to 5.19% in July and 6.99% compared to same month of 2013. The annual rate of inflation, based on the final index, for June was revised to 5.66% from 5.43% reported on that date.

Department of Official Language under Ministry of Home Affairs, Government of India has awarded Indira Gandhi Rajbhasha Award (second prize) to Rubber Board of India for excellence in implementation of official language policy. Dr. A. Jayathilak, Chairman-Rubber Board received the award from the Hon’ble President of India - Pranab Mukherjee in a function held at Rashtrapathi Bhavan.

The benchmark RSS4 grade rubber closed at `.122.50 a kg at Kottayam, while RSS3 grade closed at `.100.19 a kg at Bangkok and Malaysian SMR20 closed at `.92.26 a kg. On National Multi Commodity Exchange September 2014 futures closed at `.121.55 a kg, October at `.121.52, November at `.121.68, December at `.122.10 and January 2015 closed at `.121.58 a kg. Tommorrow the market may touch a low of `.120 a kg for September contract and may close in green. On Tokyo Commodity Exchange, tommorrow the market is expected to touch a low of  ¥191 a kg for February contract and most probably may close around ¥193 a kg.

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

For 2014-15 Rubber Forecast, http://rubber4u.com/Public/RForecast.pdf

Rubber4U

Rubber4U - 15th September 2014 issue

AIRIA Office Bearers

Prices at multi-year low and still under pressure

The auto sales momentum seen in the last couple of months have given a positive sales volume both in the original equipment and replacement tyre market. Fall in crude prices to US$100 per barrel is a big positive outlook for tyre manufacturers as 30% of raw material cost come from crude derivatives while 50% comes from natural rubber. While in domestic market due to poor demand from the tyre sector, which consumes over 50% of the natural rubber production in the country and bear trend in the overseas market put pressure on prices despite disruptions in tapping owing to heavy South-West monsoon.

Domestic natural rubber prices have seen the sharpest fall in five years, hitting `.121 a kg. Rubber prices are down 28.40% from the average of `.169 a kg in January. A slowdown in demand along with over supply in markets has sent international rubber prices spiraling down. According to experts, increase in acreage of rubber about seven years ago in key rubber producing countries like Thailand and Malaysia has now translated into higher supply. Fortunately, for rubber goods manufacturers, it coincides with a contraction in demand from China, the world’s leading tyre manufacturing country. There’s news of a rubber inventory pile-up in China, which leaves scope for a further drop in prices from current levels.

The benchmark RSS4 grade rubber closed at `.121 a kg at Kottayam, while RSS3 grade closed at `.100.86 a kg at Bangkok and Malaysian SMR20 closed at `.92.21 a kg. On National Multi Commodity Exchange September 2014 futures closed at `.116.97 a kg, October at `.116.76, November at `.116.94, December at `.117.42 and January 2015 closed at `.119.58 a kg. Tommorrow the market may touch ¥116 a kg tag, for September contract. On Tokyo Commodity Exchange, September 2014 futures series closed at ¥177.5 a kg, October at ¥177.8, November at ¥181.7, December at ¥184.9, January 2015 at ¥187.5 and the contract for delivery in February 2015 closed at ¥188.6 a kg. Tommorrow the market is expected to touch ¥185 a kg tag, for February contract.

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

For 2014-15 Rubber Forecast, http://rubber4u.com/Public/RForecast.pdf

Rubber settles lower

The Tokyo Commodity Exchange rubber contract for February delivery was down ¥5.6 a kg to settle at ¥191 per kg. It fell to an intraday low of ¥190.8. Investors sold contract to stop losses as they saw the yen rising against the dollar.

The benchmark RSS4 grade rubber closed at `.124 a kg at Kottayam, while RSS3 grade closed at `.102.82 a kg at Bangkok and Malaysian SMR20 closed at `.94.76 a kg. On National Multi Commodity Exchange September 2014 futures were trading at `.117.64 a kg, October at `.117, November at `.117 and December at `.117.40 a kg, at 15.30 IST. On Tokyo Commodity Exchange, September 2014 futures series closed at ¥181 a kg, October at ¥181.2, November at ¥184.2, December at ¥187, January 2015 at ¥189.6 and the contract for delivery in February 2015 closed at ¥191 a kg.

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

For 2014-15 Rubber Forecast, http://rubber4u.com/Public/RForecast.pdf

Still rubber under pressure

The National Science Foundation has awarded $800,000 to University of Akron (Ohio-United States) researcher Judit E. Puskas for her project to create a halogen-free synthetic rubber made from renewable resources. This funding will help push new eco-friendly materials to market. If successful, Puskas’ research project will result in a new material that will reduce the carbon footprint of the SR manufacturing process and produce improved, cost-effective thermoplastic biocompatible rubber, according to University of Akron.

Thailand military government has sold half of its 200,000 tonne rubber stockpile to a Thai rubber exporter and aims to sell the rest by the end of September. The government has signed a contract with the exporter and rest of the rubber stock should be cleared up from the state warehouses within three months. The 100,000 tonnes of rubber was sold at 62.60 baht ($1.95) a kg.

Despite light rain, Thiru Onam, the most important day in the 10 day long festival, was celebrated across Kerala with a lavish 26 dish traditional vegetarian lunch. People were in a festive mood, while a few from the central district of Kerala recalled the celebration days when the rubber prices were at its peak.

A slowdown in demand along with oversupply in the global markets, natural rubber prices have fallen to its five year low, while domestic imports have increased. Now the planters seek safeguards in the form of hike in import or anti-dumping duty to sustain their business in face of rising production costs. If the price decline continues, majority of planters will be forced to abandon rubber cultivation or switch over to other activities.

The benchmark RSS4 grade rubber closed at `.125.50 a kg at Kottayam, while RSS3 grade closed at `.105.62 a kg at Bangkok and Malaysian SMR20 closed at `.97.94 a kg. On National Multi Commodity Exchange September 2014 futures were trading at `.121.94 a kg, October at `.120.62, November at `.120.70 and December at `.121.50 a kg, at 16.20 IST. On Tokyo Commodity Exchange, September 2014 futures series closed at ¥184.7 a kg, October at ¥185.5, November at ¥189.5, December at ¥192.9, January 2015 at ¥195.4 and the contract for delivery in February 2015 closed at ¥196.6 a kg.

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

For 2014-15 Rubber Forecast, http://rubber4u.com/Public/RForecast.pdf

Growers seeks hike in import duty

The international and domestic natural rubber market continues to be under pressure, due to subdued demand and bearish trend in the overseas market. The crisis in the domestic rubber industry has deepened as prices continue to collapse. In India RSS4 grade rubber slipped to its weakest level since 2009 and currently trading at `.127 a kg. While rubber growers in Karnataka have urged the Central Government to increase the import duty on natural rubber to 75% from the current 20% or `.30 a kg, whichever is lower.

According to the Rubber Trade Association of Japan, crude rubber inventories at Japanese ports stood at 16,903 tonnes, as of 20th August, down by 3.6% compared to 10th August. While rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 3.9% to 163,706 tonnes, last week.

Vietnam’s General Department of Customs said that during January-August 2014, country’s natural rubber export was 548,000 tonnes and its value was US$989 million. Rubber export saw a decline of 9.8% in volume and 31.9% in value compared to the same period last year. In an effort to boost export, Vietnam is considering cutting the rubber export tax to zero from the current rate of 1%.

Natural rubber import is likely to be more attractive for domestic consumers as leading producing countries weigh more concessions on export. The benchmark RSS4 grade rubber closed at `.127 a kg at Kottayam, while RSS3 grade closed at `.107.84 a kg at Bangkok and Malaysian SMR20 closed at `.98.69 a kg. On National Multi Commodity Exchange September 2014 futures were trading at `.126.80 a kg, October at `.125.45, November at `.125.25 and December at `.125.40 a kg, at 15.30 IST. On Tokyo Commodity Exchange, September 2014 futures series closed at ¥188 a kg, October at ¥189.4, November at ¥193.2, December at ¥196.3, January 2015 at ¥198.7 and the contract for delivery in February 2015 closed at ¥200.2 a kg. Tommorrow the market may move from red to green and may trade between ¥198 and ¥202 a kg, for February contract.

Read lot more in Rubber4U – 15th September 2014 issue

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

For 2014-15 Rubber Forecast, http://rubber4u.com/Public/RForecast.pdf