Rubber4U

Rubber4U - 1st November 2014 Issue

Bright day ahead

The domestic car sales which were lackluster in the last year festive season are sparkling this year. Festive season is a period when most car companies see at least 20% growth in sales. The drop in fuel prices and stable interest rates has increased the consumer confidence. After a slowdown of almost three years, the industry this year is seeing steady volume growth every month and auto industry expects the demand to remain strong during the year ahead.

Thailand Industry Minister Chakramon Phasukvanich expressed confidence about the short and long term measures taken by the government to address the low rubber price will be successful. The government will be removing excess rubber from the market during November and April, which will be achieved by having six banks providing loans to latex processing businesses to buy the excess rubber. This measure is expected to remove 200,000 tonnes of latex from the system and result in an immediate increase of rubber price.

Today, the benchmark RSS4 grade rubber closed at `.125 a kg at Kottayam, while Malaysian SMR20 closed at `.96.26 a kg. On National Multi Commodity Exchange November 2014 futures closed at `.125.62 a kg, December at `.124.82, and January 2015 at `.124.99 a kg. Tokyo Commodity Exchange, October 2014 futures series closed at ¥180.7 a kg, November at ¥184, December at ¥187.3, January 2015 at ¥191.2, February at ¥194.3 and the contract for delivery in March 2015 closed at ¥195.9 a kg. Tommorrow most probably RSS3 grade may close around `.105.50 a kg at Bangkok and Malaysian SMR20 may close around `.97.60 a kg. While it is expected that Tocom the contract for delivery in March 2015 may close around ¥200 a kg.

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

NR still under pressure as crude oil looks bearish

Fall in crude oil prices spells bad news for natural rubber growers. With Brent crude oil prices plunging to a four-year (has fallen to US$80 per barrel), natural rubber prices, too, are set to come under pressure, because as crude prices drop, the rates of synthetic rubber will also drop. Consumption of synthetic rubber in India has increased in the first quarter of 2014-15 to 58.9% against 57.6% last year.

The government should encourage rubber replantation and offer rubber growers subsidies to plant new trees. Automotive Tyre Manufacturers’ Association wants these measures implemented in order to address the reluctance of growers to plant new trees, which can’t be tapped for their first six to seven years. Without encouragement, the ATMA fears growers will continue to tap older lower yielding trees.

According to a Kerala state government official, state will buy rubber at `.5 per kg more than prevailing market price from farmers and the cabinet has decided to buy rubber through state-run agencies. Kerala chief minister Oommen Chandy demanded a total ban on rubber imports, besides seeking imposition of higher duty rates on synthetic, sheet and block rubber and other rubber products.

The Indian government has fixed new gas price at US$5.61 per million british thermal unit, increased from US$4.2 per million british thermal unit earlier, while it has reduced diesel price in Delhi by `.3.37 per litre following sharp fall in crude oil prices in international markets. This new gas price hike will be effective from 1st November, while the diesel price cut will be effective from today midnight.

Rubber prices, however, improved in Asian market as China came up with better trade data and on talks of producers in South-East Asia planning supply curbs. According to the latest data, benchmark RSS4 grade rubber closed at `.123 a kg at Kottayam, while RSS3 grade closed at `.99.58 a kg at Bangkok and Malaysian SMR20 closed at `.92.16 a kg. On National Multi Commodity Exchange November 2014 futures closed at `.122.71 a kg, December at `.121.52, January 2015 at `.122.25, February at `.121.20, March at `.121.80 and April at `.122 a kg. Tokyo Commodity Exchange, October 2014 futures series closed at ¥178.2 a kg, November at ¥181.5, December at ¥182.6, January 2015 at ¥185.6, February at ¥188.5 and the contract for delivery in March 2015 closed at ¥189 a kg.

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

Rubber4U

Rubber4U - 15th October 2014

Meeting to plan out revival strategy

Major rubber producing countries are still looking for solutions. The Association of Natural Rubber Producing Countries will meet on 13th October in Kuala Lumpur; while, Malaysia is also proposing to preponed International Tripartite Rubber Council meeting scheduled for 12th December to sometime in early November to resolve issues related to rubber industry.

The Malaysian Rubber Glove Manufacturers Association has urged the government to provide tax breaks in Budget 2015 to encourage rubber glove sector to be more aggressive in implementing more automation and creation of proprietary technology.

On 7th October, benchmark RSS4 grade rubber closed at `.121 a kg at Kottayam, while today RSS3 grade closed at `.95.76 a kg at Bangkok and Malaysian SMR20 closed at `.87.77 a kg. On National Multi Commodity Exchange October 2014 futures were trading at `.122.15 a kg, November at `.119.95, December at `.119.65 and January 2015 at `.119.79 a kg at 12.30 IST. Tokyo Commodity Exchange, October 2014 futures series closed at ¥173.6 a kg, November at ¥175.9, December at ¥178.4, January 2015 at ¥181.1, February at ¥181.8 and the contract for delivery in March 2015 closed at ¥181.1 a kg.

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

Urging members to sell at floor price

Thailand and Malaysia have thrown their support behind an Indonesian proposal to set a $1.50 per kg minimum floor price plan. In a statement Malaysian Rubber Board said the move was in accordance with the recommendation by International Rubber Consortium Ltd urging member countries not to offer natural rubber below the stipulated price in order to address the current low natural rubber price.

Dealers are confident that natural rubber market fundamentals will remain intact and promising, as can be seen from the latest statistical bulletin released by the International Rubber Study Group. The global stock level has declined to approximately 2.55 million tonnes in June 2014 from 3.01 million tonnes as at December 2013.

Indian Farmers Movement (INFAM) has urged the Union government to formulate a national policy for road rubberisation scheme, at least in national highways, to enhance internal consumption of natural rubber, which would benefit lakhs of rubber farmers in the country. INFAM pointed out that the government had taken several effective measures during 2002-03 periods when farmers faced a similar situation. Such measures are needed now to save the rubber sector from crisis.

The latest closing of the benchmark RSS4 grade rubber was at `.120.50 a kg at Kottayam, while RSS3 grade closed at `.94.56 a kg at Bangkok and Malaysian SMR20 closed at `.87.59 a kg. On National Multi Commodity Exchange October 2014 futures closed at `.120.34 a kg, November at `.118.14, December at `.117.88 and January 2015 at `.117.65 a kg. Today, on Tokyo Commodity Exchange, October 2014 futures series closed at ¥168.5 a kg, November at ¥171.2, December at ¥173.5, January 2015 at ¥175.8, February at ¥177.2 and the contract for delivery in March 2015 closed at ¥176.4 a kg.

Read lot more in Rubber4U – 15th October 2014 issue

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

How do they ensure?

Rubber futures in Tokyo and Singapore slumped on 1st October to the lowest levels since 2009, suggesting the producers may need to take more drastic measures. Thailand and Malaysia have thrown their support behind an Indonesian proposal to set a $1.50 per kg minimum floor price plan. The measure will prevent natural rubber price from falling further and revive market sentiment. While Indonesian Rubber Association’s (GAPKINDO) move to reach out to other major growers in a call for action is viewed as a positive step by growers. Previous efforts to shore up prices by the three Southeast Asian producers have had little success in the face of abundant supply and weaker demand.

While addressing the reporters, Kerala Chief Minister Oommen Chandy said that the state government has decided to increase the use of rubber based bitumen for making and repairing roads and Public Works Department would order more rubber based bitumen from Bharat Petroleum Corporation’s Kochi Refinery. The minister further added that the hike in land registration fee and stamp duty will not be reduced or withdrawn.

On Wednesday, the benchmark RSS4 grade rubber closed at `.121.50 a kg at Kottayam, while RSS3 grade closed at `.95.56 a kg at Bangkok and Malaysian SMR20 closed at `.89.15 a kg. On National Multi Commodity Exchange October 2014 futures closed at `.120.34 a kg, November at `.118.14, December at `.117.88 and January 2015 at `.117.65 a kg. Today, Tokyo Commodity Exchange, October 2014 futures series closed at ¥166.3 a kg, November at ¥170.6, December at ¥172.7, January 2015 at ¥174.9, February at ¥175.6 and the contract for delivery in March 2015 closed at ¥175.4 a kg.

Read lot more in Rubber4U – 15th October 2014 issue

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