Sunday, February 28, 2016

Lots of expectations, will it get fulfilled?


Union Budget 2016-17 will be presented on 29th February and industry expects to see a blueprint that would strengthen the demand scenario and would be focused on pushing the Indian economy to the targeted GDP growth. Finance minister Arun Jaitley faces a tough task of balancing the needs of farm sector as well as the industry when he presents his third Budget. On the tax front, the Budget may continue with the status quo, while it may tinker with the exemptions.

While the fortune of the Indian tyre industry is knotted with the performance of the automotive sector. With economic activity gathering pace and the RBI ushering in monetary easing, it could boost consumer sentiment. The domestic production of natural rubber is insufficient to meet the growing demand; import dependence will remain for quite some time, as the gap is widening. But it should not be at the cost of hurting domestic business, especially when the industry is going through a manufacturing slump. Demand for tyres is expected to accelerate in 2016-17. Industry expects this budget to help boost demand and keep the industry momentum going.

The Association of Planters of Kerala wanted amendments in the Plantation Labour Act, which mandates the provision of housing, sanitation and medical care facilities to workers. While Indian Rubber Dealers Federation has urged the Centre to enhance the replanting subsidy to `.1 lakh per hectare from the present `.20,000. Growers seek a temporary ban on imports till a safeguard duty is levied.

Automotive Tyre Manufacturers Association (ATMA) said the existing curbs on natural rubber import are restricting them from sourcing the raw material at competitive prices at a time when domestic output is declining sharply. In view of such steep fall in natural rubber production, imports are a must to meet the growing demand of tyres from auto and transport sectors. High import duties on natural rubber and much lower duties on finished tyres is leading to indiscriminate surge in import and dumping of tyres in India.

Don’t expect much on Monday.

The benchmark RSS4 grade rubber closed at `.96.50 a kg at Kottayam, while RSS3 grade closed at `.89.42 a kg at Bangkok and Malaysian SMR20 closed at `.78.03 a kg. On National Multi Commodity Exchange March 2016, the futures closed at `.98.53 a kg, April at `.101.94 and May 2016 closed at `.103.90 a kg. Tokyo Commodity Exchange March 2016 futures series closed at ¥147.4 a kg, April at ¥149.5, May 2016 at ¥152.3, June at ¥153.9, July at ¥155.2 and the contract for delivery in August 2016 closed at ¥155.6 a kg. On Monday, most probably Tocom futures contract for delivery in August 2016 may trade in negative range of ¥153 & ¥158 a kg.

To read Rubber4U – 1st March 2016 issue: http://rubber4u.com/Public/Abcd.pdf
For 2015-16 Rubber Forecast: http://rubber4u.com/Public/RForecast.pdf

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