Markets will remain under pressure

Investors are more worried about possible imposition of higher import tariffs on Japanese automobiles by the US administration, but the benchmark Tokyo rubber futures recovered and ended on higher note, but were down for a second straight week due to the fears over US-China trade war which may hurt demand in China. The TOCOM rubber contract for January 2019 delivery finished 0.9 yen higher at 168.0 yen per kg.

The rubber contract on the Shanghai futures exchange for September delivery fell 10 yuan to finish at 10,285 yuan per tonne as concerns about oversupply persisted. According to Shanghai Futures Exchange, rubber inventories in its warehouses rose 0.4% from last Friday.

A breakthrough in US-EU trade talks also lent support to oil prices. Oil prices edged lower after three days of gains, but took support from Saudi Arabia suspending oil shipments through the Red Sea's Bab al-Mandeb strait, falling US inventories and easing trade tensions between US and Europe.

According to Rubber Authority of Thailand, to stimulate international prices, Thailand plans to cut supply of up to 50,000 tonnes of natural rubber output by reducing the rubber growing areas.

The benchmark RSS4 grade rubber closed at `.131.50 a kg at Kottayam, while RSS3 grade closed at `.101.24 a kg at Bangkok and Malaysian SMR20 closed at `.90.75 a kg. On Multi Commodity Exchange August 2018, the futures closed at `.132.12 a kg and September closed at `.129.98 a kg. Tokyo Commodity Exchange August 2018 futures series closed at ¥161.6 a kg, September at ¥162.6, October at ¥165.5.2, November at ¥168, December 2018 at ¥168.3 and the contract for delivery in January 2019 closed at ¥168 a kg.

To read Rubber4U – 1st August 2018 issue: http://rubber4u.com/Public/Abcd.pdf

For 2018-19 Rubber Forecast: http://rubber4u.com/Public/RForecast.pdf

Possibility of supply deficit in the second half

The Organization of the Petroleum Exporting Countries (OPEC) agreed Friday to ease crude output limits, paving the way for fresh crude supply to enter the market, at a meeting in Vienna together with non-OPEC oil producers to discuss output policy. OPEC agreed for a modest increase in oil production by about 1 million barrels per day from July after its leader Saudi Arabia persuaded arch-rival Iran to cooperate amid calls from major consumers to help reduce the price of crude and avoid a supply shortage.

The smaller-than-expected increase agreed upon by major oil exporters also renewed investor optimism. On the New York Mercantile Exchange crude futures for August delivery rose 4.6% to settle at $68.58 a barrel, while on London's Intercontinental Exchange, Brent climbed 3.4% to trade at $75.55 a barrel.

The United States, China and India had urged OPEC to release more supply to prevent an oil deficit that would hurt the global economy. Saudi Arabia and Russia want to raise output, but some other OPEC members, including Iran, have opposed this. Falling production in Venezuela and Libya, as well as the risk of lower output from Iran as a result of US sanctions, have all increased market worries of a supply shortage.

Another big uncertainty for oil is the escalating dispute between the United States and China. If a 25% duty on US crude imports is implemented by Beijing, American oil would become uncompetitive in China, forcing it to seek buyers elsewhere. If China's import demand dries up, more than 300,000 bpd of US crude will have to find a new destination.

OPEC may meet again in September.

The benchmark RSS4 grade rubber closed at `.126 a kg at Kottayam, while RSS3 grade closed at `.105.44 a kg at Bangkok and Malaysian SMR20 closed at `.92.10 a kg. On National Multi Commodity Exchange July 2018, the futures closed at `.126.34 a kg, August at `.127.23 a kg and September closed at `.126.34 a kg. Tokyo Commodity Exchange June 2018 futures series closed at ¥160 a kg, July at ¥166, August at ¥167.2, September at ¥168.7, October at ¥172 and the contract for delivery in November closed at ¥173.4 a kg.

To read Rubber4U – 1st July 2018 issue: http://rubber4u.com/Public/Abcd.pdf

For 2018-19 Rubber Forecast: http://rubber4u.com/Public/RForecast.pdf

Imports hurting domestic industry

As there is evidence suggesting that, for decades, imports from abroad have eroded domestic auto industry, U.S. Commerce Department said it will open a so-called Section 232 investigation into whether imports of vehicles and auto parts harm national security.

The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security, Commerce Secretary Wilbur Ross said in a statement.

According to OPEC and oil industry sources, Organisation of the Petroleum Exporting Countries may decide in June to lift output to make up for reduced supply from Iran and Venezuela and in response to concerns from Washington about a rally in oil prices, as Venezuela’s output has fallen amid an economic crisis, while Iran’s supply is threatened by U.S. sanctions.

The benchmark RSS4 grade rubber closed at `.128 a kg at Kottayam, while RSS3 grade closed at `.119.04 a kg at Bangkok and Malaysian SMR20 closed at `.99.05 a kg. On National Multi Commodity Exchange June 2018, the futures closed at `.130.91 a kg, July at `.134.36 a kg and August closed at `.135.79 a kg. Tokyo Commodity Exchange May 2018 futures series closed at ¥182 a kg, June at ¥184.5, July at ¥188.1, August at ¥190.1, September at ¥192.1 and the contract for delivery in October closed at ¥193.8 a kg. On Friday, most probably Tocom futures contract for delivery in October 2018 may trade in the range of ¥192 & ¥196 a kg. 

To read Rubber4U – 1st June 2018 issue: http://rubber4u.com/Public/Abcd.pdf

For 2018-19 Rubber Forecast: http://rubber4u.com/Public/RForecast.pdf

Oil slips, tyre price increases

US crude oil prices have slipped back after strong gains made as the White House prepared to announce a decision on whether it will withdraw from the Iran nuclear deal. If US president Donald Trump opts to reimpose sanctions on Iran it would probably entail reductions in the country’s oil exports and deliver a jolt to international markets.  West Texas Intermediate, the US oil benchmark, rose above $70 a barrel on 7th May for the first time in more than three years.

Domestic tyre prices have risen in the range of 2.5-3%, as manufacturers deal with an increase in input prices and a weaker rupee. Oil and its linked derivatives such as carbon black form an integral part of a tyre company’s raw material basket. In addition, a weaker rupee means imports become more expensive.

The benchmark RSS4 grade rubber closed at `.121 a kg at Kottayam, while RSS3 grade closed at `.117.84 a kg at Bangkok and Malaysian SMR20 closed at `.96.53 a kg. On National Multi Commodity Exchange May 2018, the futures closed at `.121.65 a kg, June at `.125.79 a kg and July closed at `.128.24 a kg. Tokyo Commodity Exchange May 2018 futures series closed at ¥179 a kg, June at ¥183.6, July at ¥186.7, August at ¥189.3, September at ¥190.9 and the contract for delivery in October closed at ¥191.7 a kg. On Wednesday, most probably Tocom futures contract for delivery in October 2018 may trade in the range of ¥189 & ¥193 a kg.

To read Rubber4U – 15th May 2018 issue: http://rubber4u.com/Public/Abcd.pdf

For 2017-18 Rubber Forecast: http://rubber4u.com/Public/RForecast.pdf

Tricky days ahead

Oil prices fell as markets opened the week cautiously following western air strikes in Syria and as American drilling for new production continued to rise. The United States, France and Britain launched 105 missiles on 14th April, targeting what they said were three chemical weapons facilities in Syria in retaliation for a suspected poison gas attack in Douma on 7th April. Asia began cautiously after the weekend stikes, while oil markets also came under pressure from a rise in U.S. oil drilling activity.

President Vladimir Putin warned on 15th April that further Western attacks on Syria would bring chaos to world affairs, as Washington prepared to increase pressure on Russia with new economic sanctions. Investors continued to worry about the impact of a wider conflict in the Middle East.

The benchmark RSS4 grade rubber closed at `.120 a kg at Kottayam, while RSS3 grade closed at `.111.95 a kg at Bangkok and Malaysian SMR20 closed at `.91.39 a kg. On National Multi Commodity Exchange April 2018, the futures closed at `.119.79 a kg, May at `.120.21 a kg, June at `.122.31 a kg and July closed at `.123.21 a kg. Tokyo Commodity Exchange April 2018 futures series closed at ¥174.9 a kg, May at ¥178.7, June at ¥183.5, July at ¥185.4, August at ¥185.3 and the contract for delivery in September closed at ¥184.8 a kg. On Monday, most probably Tocom futures contract for delivery in September 2018 may trade in the range of ¥180 & ¥185 a kg.

To read Rubber4U – 15th April 2018 issue: http://rubber4u.com/Public/Abcd.pdf

For 2017-18 Rubber Forecast: http://rubber4u.com/Public/RForecast.pdf

Don’t expect much, its very shaky

Receding trade war fears after reports of possible trade negotiations between the US and China and government's announcement of lower-than-expected borrowing programme for the first half of the fiscal year 2019 have helped markets close higher during the week ended. 

The Monetary Policy Committee of the Reserve Bank of India will announce its resolution under the First Bi-monthly Monetary Policy Statement for 2018-19 and is expected to keep rates unchanged for the rest of this year at its 5th April 2018 meeting but shift to a hawkish stance by the end of this year and increase in interest rates is not ruled out as inflation pressures build up.

The benchmark RSS4 grade rubber closed at `.123 a kg at Kottayam, while RSS3 grade closed at `.111.29 a kg at Bangkok and Malaysian SMR20 closed at `.88.86 a kg. On National Multi Commodity Exchange April 2018, the futures closed at `.119.67 a kg, May at `.122.23 a kg, June at `.125.01.54 a kg, July at `.128.18 a kg and August 2018 closed at `.125.60 a kg. Tokyo Commodity Exchange April 2018 futures series closed at ¥170.6 a kg, May at ¥172.7, June at ¥178.1, July at ¥180.1, August at ¥179.8 and the contract for delivery in September closed at ¥179.6 a kg. On Thursday, most probably Tocom futures contract for delivery in September 2018 may trade in the range of ¥174 & ¥180 a kg.

To read Rubber4U – 1st April 2018 issue: http://rubber4u.com/Public/Abcd.pdf

For 2017-18 Rubber Forecast: http://rubber4u.com/Public/RForecast.pdf