Rubber4U

Rubber4U - 1st March 2015 issue

Don’t expect much

The Indian Union Budget 2015-16 to be presented on 28th February and a lot of anticipation is brewing in the rubber and allied industries which hasn’t seen much growth in the last two years. The industries have their own set of demands and are expecting changes in the Union Budget.

Auto sector is expecting roll back of excise duty hike to buoy demand, as excise duty hike has roughly translated into a 4-6% price hike across passenger vehicle categories, affecting demand. Avoid inverted duty structure - the excise duty on commercial vehicles is 8%, while raw material and engineering inputs are taxed at 12%.

Lower the Special Additional Duty (SAD) on imported raw material to 2% from 4%, and bring down customs duty on various inputs to 5% from 10%. Offer special incentives for automobile exports, policy on overloading of commercial vehicles and a policy towards replacement of vehicles to promote cleaner environment and fuel efficient vehicles. Clear the uncertainty over exclusion of automobiles from the Free Trade Agreement with the European Union. If it comes into effect, European carmakers would be able to sell vehicles at lower duty in India.

Rubber industry wants removal of anti-dumping duties on the import of raw materials like rubber chemicals (like Butyl Rubber SBR grade 1500/1700), which are not manufactured locally. Levy anti-dumping duty on imported Chinese tyres. The high import duty on rubber raw materials makes it difficult for the domestic tyre industry to compete against imported Chinese tyres.

Kerala state had sought Central assistance many times to save the rubber growers. The rubber growers had been demanding as high as a 75% hike, even if the import duty on rubber is raised, it will not be up to the level expected, the chance is to increase it from the current 20% to 30%. In the maiden budget of the BJP government, assistance for rubber farmers may not get attention, due to political reasons.

Rubber Mark, the apex federation of primary cooperative rubber marketing societies, had suggested setting up of a price stabilisation fund to compensate the loss to farmers due to price fall. Today the issue was raised during Zero Hour ​ in the Lok Sabha. Congress and Left MPs from Kerala accused the government of not heeding to the plight of rubber growers and demanded an income stabilisation fund be set up to protect them.

The benchmark RSS4 grade rubber closed at `.140.30 a kg at Kottayam, while RSS3 grade closed at `.116.90 a kg at Bangkok and Malaysian SMR20 closed at `.87.19 a kg. On National Multi Commodity Exchange March 2015 futures were trading at `.126.40 a kg, April at `.127.85, May at `.128.70, June at `.130.20, July at `.131.45 and August at `.132.60 a kg. On Tokyo Commodity Exchange, March 2015 futures series closed at ¥217.7 a kg, April at ¥218, May at ¥218.1, June at ¥217, July at ¥215.9 and the contract for delivery in August 2015 closed at ¥214.5 a kg.

To read Rubber4U – 15th February 2015 issue: http://rubber4u.com/Public/Abcd.pdf

For Union Budget 2015-16 Highlights visit: www.rubber4u.com

Anticipation from reformist Union Budget

The Narendra Modi government will present its first budget on 28th February. The budget session of Parliament commence from today and concludes on 8th May. The Economic Survey will be tabled on 27th February and the Railway Budget on 26th February 2015.

The Society of Indian Automobile Manufacturers (SIAM) is hoping that the Finance Minister will roll-back the excise duty in the Union Budget 2015-2016. The excise duty cut which was initially implemented on February 2014 was finally rolled back as of January 2015. The excise duty hike has roughly translated into a 4%-6% price hike across different vehicular categories which had an adverse affect on demand.

The import duty on natural rubber in China is 10%, while in India it is 20% or `.30 per kg, whichever lower. The import duty on finished rubber products is between 0 to 10%, while the duty on raw materials for the rubber industry is between 5 to 70%. All India Rubber Industries Association (AIRIA) in its pre-budget presentation to government has asked for lowering of import duties on raw material and raising of duties on the import of finished rubber products.

 

Inverted duty system has affected the growth of Indian rubber industry, as the country is deficient both in natural rubber and synthetic rubber production which are imported. Hence, the cost of finished goods made from these imported raw materials also increases, hard-hitting the domestic manufacturers, mostly the small and medium enterprises. As small manufacturers can’t compete with cheaper goods imported from China and other countries, many small rubber goods manufacturers have turned to trading of rubber goods leading to a loss to the exchequer and also loss of employment.

The benchmark RSS4 grade rubber closed at `.141.55 a kg at Kottayam, while RSS3 grade closed at `.117.96 a kg at Bangkok and Malaysian SMR20 closed at `.88.06 a kg. On National Multi Commodity Exchange March 2015 futures closed at `.126.47 a kg, April at `.127.53 and May at `.128.50 a kg. On Tokyo Commodity Exchange, February 2015 futures series closed at ¥210.4 a kg, March at ¥217.8, April at ¥218.6, May at ¥219, June at ¥217.2 and the contract for delivery in July 2015 closed at ¥216.9 a kg.

To read Rubber4U – 15th February 2015 issue: http://rubber4u.com/Public/Abcd.pdf

For Union Budget 2015-16 Highlights visit: www.rubber4u.com

Hopping for the best

Indian tyre industry has recently invested over `.26,000 crore on capacity expansion. However, low import tariffs have encouraged large and growing volume of tyre imports and have badly hurt the domestic industry by cheap imports from China. The tyres can be imported at a rate of 5% or even nil rate of duty under various trade agreements, while the same for natural rubber is at 20%. In a pre-budget memorandum submitted by Automotive Tyre Manufacturers' Association to the government, requesting the centre to double import duty on tyres to 20% in the upcoming Budget 2015, which in turn will provide a level-playing field to the domestic industry.

                      

India’s natural rubber imports during April’ 14 to January 2015 is at 359,857 tonnes, which is 14.22% more than the same period of previous year, which was at 315,049 tonnes. The Association of Planters of Kerala has sought to enhance the import duty on natural rubber to 30% from next fiscal, besides an immediate ban on imports temporarily as an urgent intervention. If corrective measures are not taken immediately, there would be a major shift from rubber cultivation. Already small growers have started looking for other vocations for sustainable income.

The benchmark RSS4 grade rubber closed at `.140.90 a kg at Kottayam, while RSS3 grade closed at `.117.43 a kg at Bangkok and Malaysian SMR20 closed at `.88.30 a kg. On National Multi Commodity Exchange March 2015 futures closed at `.127.17 a kg, April at `.128.13 and May at `.128.89 a kg. On Tokyo Commodity Exchange, February 2015 futures series closed at ¥216.9 a kg, March at ¥217.4, April at ¥218.6, May at ¥218.8, June at ¥219.4 and the contract for delivery in July 2015 closed at ¥218.9 a kg.

To read Rubber4U – 15th February 2015 issue: http://rubber4u.com/Public/Abcd.pdf

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

Rubber4U

Rubber4U - 15th February 2015 issue

Interventions showing the results

Thailand’s interventions in the natural rubber market are propping up prices and keeping supplies tight. The global benchmark futures on Tokyo Commodity Exchange posted gains this week, hitting a one-month high of ¥218.5 a kg. The benchmark Tocom rubber contract for July delivery ended down by 1% or ¥2.1 per kg at ¥212.4 per kg, on Tuesday.

According to Rubber Trade Association of Japan, crude rubber inventories at Japanese ports stood at 12976 tonnes as of 20th January, down 0.5% from 10 days earlier figure. While rubber inventories in the warehouses monitored by SHFE rose 0.1% last week to 164821 tonnes.

The United States is set to slap more duties on imports of tyres from China after the Department of Commerce determined they were sold too cheaply in the United States.

India's natural rubber output in January 2015 dropped to 60,000 tonnes compared to 89,000 tonnes in January 2014, as some farmers curtailed tapping due to lower prices. While the consumption during the month rose only 0.78% to 84,000 tonnes from 83,345 tonnes in January 2014, prompting tyre makers to increase imports by 10.65% to 30,441 tonnes from 27,511 tonnes.

The benchmark RSS4 grade rubber closed at `.137.10 a kg at Kottayam, while RSS3 grade closed at `.114.23 a kg at Bangkok and Malaysian SMR20 closed at `.86.47 a kg. On National Multi Commodity Exchange February 2015 futures closed at `.125.07 a kg, March at `.125.75, April at `.126.67 and May at `.129.40 a kg. On Tokyo Commodity Exchange, February 2015 futures series closed at ¥212 a kg, March at ¥213.6, April at ¥215.4, May at ¥215.7, June at ¥214.8 and the contract for delivery in July 2015 closed at ¥212.4 a kg.

To read Rubber4U – 1st February 2015 issue: http://rubber4u.com/Public/Abcd.pdf

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

Rubber4U

Rubber4U - 1st February 2015 issue