More action in waiting

The WTI Crude Oil markets fell during the early session on Thursday and currently trading at US$102.75 a barrel at 20.15 IST and the market continued to test the lows of the consolidation area.

Tokyo Commodity Exchange plans to attract more trading from investors in China and India to boost volume, which has jumped 22% in the first eight months of the year. The decline of rubber prices on TOCOM, which influenced the direction of global rubber prices, was weighed down by negative sentiment resulting from weaker US equities and lower crude oil prices. Uncertainty about when the U.S Federal Reserve will start tapering stimulus has made Japanese investors cautious and this may also slow trading. Market participants stayed on the sidelines, waiting for the final reading of the US second-quarter GDP data to be released.

Reserve Bank of India chief, Raghuram Rajan surprised the markets with India's first policy rate increase in nearly two years in a bid to ward off rising inflation. Expectations of rate hikes have gone up now as monetary policy has given a clear and transparent signal that an upward bias on long-term interest rates will continue and will hike rates again at the central bank's next policy review on 29th October.

Rubber declined again

Today rubber price fell again due to weakening crude oil prices and a stronger yen, which cut the appeal for the commodity. The yen climbed after Federal Reserve Bank of New York president William C Dudley said policy makers must forcefully push against economic headwinds. The contract for February delivery on the Tokyo Commodity Exchange lost as much as 2.64% to ¥276.4 a kg.

Today, at Kottayam, RSS4 grade closed at `.180 a kg. RSS3 grade closed at `.166.24 a kg at Bangkok, while Malaysian SMR20 closed at `.149.17 a kg. On the Tokyo Commodity Exchange, September futures series closed at ¥263.8 a kg, October at ¥261.8, November at ¥264.7, December at ¥269, January 2014 at ¥272.5 and the contract for delivery in February 2014 closed at ¥276.4 a kg. While on the National Multi Commodity Exchange October futures were trading at `.176.50 a kg, November at `.175.50, December at `.177.50 and January 2014 at `.179 a kg at 4.00 pm IST.

Bull market to affect tyre manufacturers

Rubber prices are entering bull market as futures hit a three-month high following indications that China's economy is likely to demand more rubber. Tuesday, the contract for February delivery on the Tokyo Commodity Exchange were trading at ¥282.2 a kg at 13:45 JST.

India is trying to tap certain sectors in the global market where China has been vacating due to rising wages. India has move up in the global value chain to increase its share in the global market. India's exports rose for the second straight month by 12.97% to US$26.14 billion in August, while the trade deficit narrowed as gold imports fell. It is expected that the agreement on trade facilitation would help in reducing transactions cost of exporters at WTO Ministerial Meeting at Bali in December.

On Monday, RSS4 grade closed at `.181 a kg, at Kottayam. Tuesday, RSS3 grade closed at `.166.24 a kg at Bangkok, while Malaysian SMR20 closed at `.149.17 a kg. On the Tokyo Commodity Exchange, September futures series were trading at ¥265 a kg, October at ¥267.6, November at ¥270.3, December at ¥273.4, January 2014 at ¥278.2 and the contract for delivery in February 2014 at ¥282.2 a kg, at 13.45 JST. While on the National Multi Commodity Exchange October futures were trading at `.177.76 a kg, November at `.177.66, December at `.179.39, and January 2014 at `.180.50 a kg.

AIRIA Office Bearers for 3013-14

Market overreacted

Market overreacted today. Credit policy could not continue the euphoria that the market had been riding on Ben Bernanke’s comments. RBI decided to hike repo rate by 25 basis points and banks are unlikely reduce their lending rates anytime soon. High interest rate has been identified as a major barrier to boosting growth. The RBI has admitted that industrial activity continues to remain sluggish and even consumption demand is now starting to weaken in the economy.

Today, at Kottayam, RSS4 grade closed at `.185.50 a kg. RSS3 grade closed at `.166.05 a kg at Bangkok, while Malaysian SMR20 closed at `.150.51 a kg. On the Tokyo Commodity Exchange, September futures series closed at ¥266.5 a kg, October at ¥269.5, November at ¥272.5, December at ¥275.3, January 2014 at ¥279.7 and the contract for delivery in February 2014 closed at ¥283.9 a kg. While on the National Multi Commodity Exchange October futures were trading at `.180.51 a kg, November at `.180.86, December at `.183, and January 2014 at `.189.50 a kg at 4.00 pm IST.

Expecting more action

The rupee slumped to a record low of 68.85 to the dollar on August 28 but has since clawed back some ground and last traded at 63.22 on Wednesday. Rupee is expected to regain further ground at the close of the current financial year at 56-58 per dollar. India's headline inflation rate based on the wholesale price index soared to a six month high of 6.1% in August. The Reserve Bank of India is expected to leave key policy rates unchanged on Friday.

Today, at Kottayam, RSS4 grade closed at `.186.50 a kg. RSS3 grade closed at `.165.24 a kg at Bangkok, while Malaysian SMR20 closed at `.150.96 a kg. On the Tokyo Commodity Exchange, September futures series closed at ¥260.9 a kg, October at ¥265.4, November at ¥267.1, December at ¥270.1, January 2014 at ¥274 and the contract for delivery in February 2014 closed at ¥277.8 a kg. While on the National Multi Commodity Exchange October futures closed at `.183.34 a kg, November at `.182.85 and December at `.185 a kg. Tommorrow one can expect the market in red.

Read lot more in Rubber4U – 1st October 2013 issue

Positive signs but weak outlook

International Rubber Study Group (IRSG) reduced its global demand growth outlook to 3.8% for 2013, down from its previous projection of 4%, due to weak consumption in the recession struck Europe. The IRSG pegged global demand for natural and synthetic rubber at 27 million tonnes for 2013, down from its prior estimate of 27.7 million tonnes.

In August 2013, India's natural rubber imports more than doubled from a year ago to 40,809 tonnes as a drop in domestic output due to heavy rainfall in Kerala, forcing tyre manufacturers to increase foreign purchases. Natural rubber production dropped 5.5% on year to 69,000 tonnes, while consumption eased by 4% to 80,000 tonnes.

In spite of the global economic slowdown, there were some pointers indicating positive signals in the rubber sector. 8.1% growth in rubber consumption by China in the first half of 2013, 4.1% growth in latex consumption and rise in vehicles sales in China and the US suggest good times for the rubber industry, said Sheela Thomas, chairperson - Rubber Board.

The Fed is expected to reduce its $85 billion a month bond-buying programme. The rupee has recovered more than 6% against the dollar since 3rd September. It looks like over the next few months WPI inflation might be headed up towards 8-10%.

Read lot more in Rubber4U – 1st October 2013 issue