Rubber Forecast 2014-15

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Rubber4U - 15th August 2014 issue

Will there be a rebound shortly?

The domestic rubber prices are moving in line with the global prices, which have been sliding for some time due to oversupply of the commodity and lack of demand. The recent declaration by Union Commerce Minister - Nirmala Sitharaman that the import duty on natural rubber will not be raised further has only compounded grower’s woes. The drop in rubber prices seems to have affected the growers very badly. Even if the government look at the prospect of exporting rubber by providing subsidy to help the growers, then the question arise about quality and price.

The benchmark RSS4 grade rubber closed at `.131 a kg at Kottayam, while RSS3 grade closed at `.114.41 a kg at Bangkok and Malaysian SMR20 closed at `.102.03 a kg. On National Multi Commodity Exchange August 2014 futures were trading at `.128.25 a kg, September at `.128.78, October at `.128, November at `.128 and December at `.128.50 a kg, at 16.45 IST. On Tokyo Commodity Exchange, August 2014 futures series closed at ¥185.6 a kg, September at ¥188.5, October at ¥190, November at ¥193.3, December at ¥196.1 and the contract for delivery in January 2015 closed at ¥198.1 a kg.

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Sheela Thomas appointed as SG of ANRPC

Rubber Board of India, Chairman - Sheela Thomas has been appointed as the Secretary General of the Association of Natural Rubber Producing Countries (ANRPC) and will be taking the charge at the head quarters of the Association in Kuala Lumpur-Malaysia in the first week of September 2014.

Today, natural rubber prices dropped further down to `.132.50 a kg at Kottayam, Malaysian SMR20 closed at `.102.71 a kg. On National Multi Commodity Exchange August 2014 futures were trading at `.130.50 a kg, September at `.130.05, October at `.129.28, November at `.129.50 and December at `.130 a kg at 16.30 IST. On Tokyo Commodity Exchange, August 2014 futures series closed at ¥189 a kg, September at ¥192.3, October at ¥193.9, November at ¥196.3, December at ¥199 and the contract for delivery in January 2015 closed at ¥201.1 a kg.

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NR prices drops to 4-1/2 year low

Today, natural rubber prices dropped to their lowest level since 12th February 2010. Demand for natural rubber is robust but higher imports are putting pressure on domestic prices. Natural rubber imports in July rose 14.8% to 36,997 tonnes, compared to July 2013. Lower prices would bring down material costs for tyre manufacturers, which in turn will boost their profitability. 

The benchmark RSS4 grade rubber closed at `.135.50 a kg at Kottayam, while RSS3 grade closed at `.119.58 a kg at Bangkok and Malaysian SMR20 closed at `.103.54 a kg. On National Multi Commodity Exchange August 2014 futures closed at `.133.94 a kg, September at `.134.06, October at `.133.07 and November at `.133.32 a kg. On Tokyo Commodity Exchange, August 2014 futures series closed at ¥191.2 a kg, September at ¥194.7, October at ¥196.4, November at ¥199.7, December at ¥202.7 and the contract for delivery in January 2015 closed at ¥204.8 a kg.

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Non-tyre rubber product trade deficit on the rise

Thailand’s Ministry of Agriculture and Agricultural Cooperatives will ask the Natural Rubber Policy Committee for 30 billion baht budget to increase the utilisation of natural rubber from 10% to 30% of four million tonnes of annual production. On the other hand Thailand’s military government will encourage farmers to cut down more rubber trees in a bid to restrict supply to help shore up rubber prices. Rubber exports from Thailand rose 9.8% to 1.7 million tonnes during January-June 2014.

Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose by 196 tonnes to 15570 tonnes. While natural rubber inventories in Qingdao-China, dropped to 214,300 mt from 239,000 mt as of 31st July, according to Qingdao International Rubber Exchange Market.

According to Indonesian Agricultural Ministry, country’s natural rubber production is seen at 3.2 million tonnes in 2014 compared to 3.1 million tonnes produced last year.

India’s natural rubber imports during January-June 2014 rose 58% to 1.61 lakh tonnes, while imports in July rose 14.8% to 36,997 tonnes compared to July 2013. India’s three major Trade Agreements with Association of South-East Asian Nations (ASEAN), Korea and Japan have led to trade deficit in non-tyre rubber products, which has gone up 165% from `.651 crore in 2008-09 to `.1725 crore in 2012-13. While overall import of rubber products has gone up 100% from `.3810 crore in 2009-10 to `.7608 crore in 2012-13.

Today, the benchmark RSS4 grade rubber closed at `.137 a kg at Kottayam, while RSS3 grade closed at `.119.67 a kg at Bangkok and Malaysian SMR20 closed at `.103.50 a kg. On National Multi Commodity Exchange August 2014 futures closed at `.135.25 a kg, September at `.133.84, October at `.132.81 and November at `.133.47 a kg. On Tokyo Commodity Exchange, August 2014 futures series closed at ¥192.2 a kg, September at ¥195.8, October at ¥198, November at ¥200.8, December at ¥203.8 and the contract for delivery in January 2015 closed at ¥205.9 a kg. Tommorrow, the most active January 2015 contract may trade in red and there is a possibility of price going below ¥204 a kg mark.

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Repo rate unchanged

Reserve Bank of India kept its key policy repo rate unchanged at 8% as expected, but warned about inflationary risks if there is a shortfall in monsoon rains. It reduced banks minimum bond holding requirements, known as the statutory liquidity ratio, by half a percentage point to 22% to free up more money for lending, effective from 9th August 2014.

Today, RSS3 grade closed at `.119.68 a kg at Bangkok and Malaysian SMR20 closed at `.103.46 a kg, on Friday. On National Multi Commodity Exchange August 2014 futures were trading at `.138.50 a kg, September at `.136.36, October at `.135.99 and November at `.135.70 a kg, at 12.35 IST. On Tokyo Commodity Exchange, August 2014 futures series closed at ¥192 a kg, September at ¥194.9, October at ¥196.9, November at ¥199.5, December at ¥202.5 and the contract for delivery in January 2015 closed at ¥204.6 a kg.

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