Rubber4U

Rubber4U - 1st September 2015 issue

TOCOM rubber falls to 10 month low as oil slump

Current oil prices have dropped dramatically in the last few months. According to Citigroup report, US oil prices may plummet to a new 11 year low of $33 a barrel or lower this year. While in 2008, during the global financial crisis US crude traded at a low of $30.28 a barrel. West Texas Intermediary crude closed at $38.24 a barrel on Monday. The international benchmark, Brent crude, was also down and closed at $42.69 a barrel. The slump is helping oil importers but hurting producers and all over the world it is holding back the inflation that is needed to justify an increase in interest rates.

Lower prices of oil and equity markets as well as the yen’s rise against the U.S dollar all added to the pressure. Natural rubber accounts for the second largest commodity import to the US after petroleum and it’s one of the top five natural rubber importers globally. In terms of overall sustainability, guayule is a multi-use, zero waste crops. After the rubber is extracted, the leftover biomass can be used as fuel or to extract biochemicals.

The benchmark RSS4 grade rubber closed at `.113 a kg at Kottayam, while RSS3 grade closed at `.93.46 a kg at Bangkok and Malaysian SMR20 closed at `.81.99 a kg. On National Multi Commodity Exchange September 2015 futures closed at `.111.46 a kg and October at `.111.55 a kg. On Tokyo Commodity Exchange, August 2015 futures series closed at ¥165.5 a kg, September at ¥166.9, October at ¥170, November at ¥172.1, December 2015 at ¥173.8 and the contract for delivery in January 2016 closed at ¥175.1 a kg. On Tuesday, most probably Tocom futures contract for delivery in January 2016 may trade in the range of ¥165 & ¥176 a kg.

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

Once again rubber at its eight month low

The recent devaluation of the yuan was aimed at helping Chinese exporters, but it would hurt the country's importers or reduce demand for imports of commodities including rubber. According to Rubber Trade Association of Japan data, the crude rubber inventories at Japanese ports stood at 16,241 tonnes as of 31st July, up by 18.3% from the last inventory date. The benchmark Tokyo Commodity Exchange (TOCOM) rubber futures fell to an 8 month low on Tuesday, tracking a drop in Shanghai futures and persistent worries over weakening demand for rubber in China and also gloomy outlook due to fall in oil prices. The TOCOM rubber contract for January delivery finished at ¥186.9 a kg. Earlier the price fell to a low of ¥189.7 a kg, the lowest since 11th December 2014. Rubber price is further expected to go down.

The benchmark RSS4 grade rubber closed at `.116.50 a kg at Kottayam, while RSS3 grade closed at `.97.14 a kg at Bangkok and Malaysian SMR20 closed at `.85.60 a kg. On National Multi Commodity Exchange September 2015 futures closed at `.114.21 a kg and October at `.114.20 a kg. On Tokyo Commodity Exchange, August 2015 futures series closed at ¥177.2 a kg, September at ¥179.2, October at ¥181.6, November at ¥183.6, December 2015 at ¥185.8 and the contract for delivery in January 2016 closed at ¥186.9 a kg. On Wednesday, most probably Tocom futures contract for delivery in January 2016 may trade in the range of ¥180 & ¥186 a kg.

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

Rubber4U

Rubber4U - 15th August 2015 issue

Market outlook not so good

A slump in the prices of crude oil deepened following the release of Chinese trade data that appeared to confirm market expectations that demand will remain slack. The market is also concerned about demand in Europe and that a possible rise in US interest rates this year could lift the value of the US dollar, which would raise the cost of commodity imports for many buyers around the world.

Spot rubber continued to remain almost unchanged with RSS4 closing at `.118.50 a kg. Domestic market sentiment has been bearish for long due to lukewarm demand from tyre manufactures and weakness in crude oil prices.

According to the data released by the Rubber Board, the production in July 2015 stood at 52,000 tonnes, 3.7% lower than the output in the same month of previous year. However, the overall deficit in production for the period April to July 2015 came to 14.03% at 190,000 tonnes. As tyre manufacturers trimmed imports expecting a further fall in rubber prices, India's natural rubber imports in July dropped 14.62% to 36,828 tonnes. Natural rubber stock increased by 19.79% in July when compared to same month of 2014.

The benchmark RSS4 grade rubber closed at `.118.50 a kg at Kottayam, while RSS3 grade closed at `.99.64 a kg at Bangkok and Malaysian SMR20 closed at `.85.66 a kg. On National Multi Commodity Exchange August 2015 futures closed at `.117.39 a kg, September at `.116.80 and October at `.116.61 a kg. On Tokyo Commodity Exchange, August 2015 futures series closed at ¥185.8 a kg, September at ¥188.8, October at ¥191.7, November at ¥193.4, December 2015 at ¥195.3 and the contract for delivery in January 2016 closed at ¥196.7 a kg. On Tuesday, most probably Tocom futures contract for delivery in January 2016 may trade in the range of ¥194.2 & ¥200 a kg.

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

Tommorrow wait and watch

The global economy is experiencing serious disruption. U.S WTI benchmark crude oil prices fell by 20% in July, the biggest monthly fall since October 2008, while Brent crude oil prices, the international benchmark, fell by 18%, the biggest monthly fall since December 2014. The collapse in crude oil prices has now adversely affected coal as well. India’s macroeconomic situation, however, is better. Low oil prices have greatly moderated inflation, though many items of daily consumption are experiencing price rise.

Inflation measured by the wholesale price index inflation (WPI) has remained negative for the past eight consecutive months and stood firm at negative 2.4% in June. The consumer price index (CPI) remained lower than RBI’s guided path target of 6%. RBI in its second bimonthly monetary policy in June had cut policy (repo) rates by 25 basis points, the third bimonthly credit policy review scheduled for 4th August and one has to wait and see whether there will be a rate cut or not. Since the economy is weak, we expect repo rate to be unchanged. RBI would rather hold the rates and wait for the next policy because there is no clarity.

The benchmark RSS4 grade rubber closed at `.120 a kg at Kottayam, while RSS3 grade closed at `.101.26 a kg at Bangkok and Malaysian SMR20 closed at `.87.56 a kg. On National Multi Commodity Exchange August 2015 futures closed at `.118.15 a kg, September at `.118.05 and October at `.117.51 a kg. On Tokyo Commodity Exchange, August 2015 futures series closed at ¥186.7 a kg, September at ¥189.5, October at ¥191.7, November at ¥193.4, December 2015 at ¥195.3 and the contract for delivery in January 2016 closed at ¥197.4 a kg. On Tuesday, most probably Tocom futures contract for delivery in January 2016 may trade in the range of ¥192 & ¥198 a kg.

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