Hoang: 2010

Thursday, December 30, 2010

Palm futures sharply higher on renewed buying interest

CPO FUTURES
CRUDE palm oil (CPO) futures on Bursa Malaysia Derivatives closed sharply higher yesterday with traders showing renewed interest after the market retreated from its seven-day rally.
"The market repeated its 33-month high feat yesterday with the third month contract hitting a high of RM3,792," a dealer said, adding that the uptrend was supported by concerns over the dry weather in Argentina that could disrupt soybean yields.
At close, January 2011 rose RM33 to RM3,814 per tonne, February 2011 gained RM55 to RM3,807, March 2011 climbed RM55 to RM3,788 per tonne and April 2011 rose RM60 to RM3,768 per tonne.

Turnover increased to 14,510 lots from 11,599 lots recorded Wednesday while open interest declined to 87,737 contracts from 88,107 contracts previously.
On the physical market, January South gained RM40 to RM3,820 per tonne.
RUBBER
THE Malaysian rubber market ended lower yesterday in line with the movements of rubber futures on the key Tokyo Commodity Exchange (TOCOM) ahead of the new year.
"There is a slight rebound in the afternoon session for the rubber futures in TOCOM and Shanghai, but overall prices are still lower today compared to Wednesday," a dealer said.
He noted that the local rubber prices were on a steady uptrend this year.
At noon, the Malaysian Rubber Board's official physical price for tyre-grade SMR 20 shed 1 sen to 1497 sen per kg while latex-in-bulk lost 3 sen to 986 sen per kg.
The unofficial sellers' closing price for tyre-grade SMR 20 was 4 sen higher at 1,501 sen per kg while latex-in-bulk declined 1.5 sen to 985.5 sen per kg.
The rubber mart will be closed today following Prime Minister Datuk Seri Najib Tun Razak's announcement, declaring it as a public holiday after Malaysia's maiden victory in the Asean Football Federation Suzuki Cup championship on Wednesday.
TIN
TIN price on the Kuala Lumpur Tin Market (KLTM) shed US$185 yesterday to close at US$26,515 per tonne, taking the cue from the London Metal Exchange (LME).
"The market took its lead from the LME which resumed trading after the Christmas holidays," a dealer said, adding that the market was quiet ahead of the year-end.
The LME, which usually sets the trend for tin prices, closed US$250 lower at US$26,600 per tonne.
On the KLTM, Japanese, European and local traders accounted for the bulk of yeseterday's lower turnover of 39 tonnes against 40 tonnes Wednesday.
Bids stood at 20 tonnes while offers totalled 66 tonnes.
The premium between the KLTM and LME widened to US$320 per tonne from US$255 previously
(Source: Palm futures sharply higher on renewed buying interest http://www.btimes.com.my/Current_News/BTIMES/articles/20101230202750/Article/#ixzz19dgM8px5)

Rubber futures gain 50% in 2010 on supply concerns

TOKYO (Commodity Online): Rubber futures have gained 50% in 2001 with June-delivery contract rising to 415.5 yen per kilogram on Thursday at Tokyo Commodity Exhcange. The bourse will be closed tomorrow and will resume trading on January 4.
Supply concerns have intensified as world's top rubber exporter, Thailand enters a low-production period known as winterering, Bloomberg reported.
Supply of natural rubber from nine major producers representing 92 percent of global output may fall 6.3 percent in the fourth quarter, cutting this year’s production growth to 5.7percent, from 6.6 percent forecast in November, according to Association of Natural Rubber Producing Countries. Output from the association’s members is estimated at 9.42 million tons this year and may climb to 9.92 million next year, the group said.
At National Multi Commodity Exchange of India (NMCE), the January contract has risen from Rs 19700 per 100 kg to Rs 20943 in December till date thereby registering a growth of 6.3%The increase in crude oil prices to $91 levels have also supported natural rubber prices. May-delivery rubber in Shanghai advanced 0.8 percent to close at 36,545 yuan ($5,534) a ton. The price has retreated from a record 38,920 yuan on Nov. 11 amid concern that China may take steps to cool inflation and economic expansion.

(Source: http://www.commodityonline.com/news/Rubber-futures-gain-50-in-2010-on-supply-concerns-35148-3-1.html)

Raw natural rubber trades at record high

According to the Vietnam Rubber Association, the price of raw natural rubber climbed to an all-time high of nearly US$5,000 per ton on international markets.

Meanwhile, domestically, the rate also exceeded VND95.5 million per ton, nearly doubled that of in the beginning of this year.

An unexpected rise in rubber prices has helped several rubber businesses increase their profits by 80-90 percent year-on-year. However, it caused many difficulties in purchasing input material for industrial rubber products producers, prompting them to reduce production to prevent losses.

(Source: http://www.saigon-gpdaily.com.vn/Business/2010/12/88468/)

A new century for rubber

Kampong Cham province
The Kingdom’s natural rubber industry is primed to grow dramatically in coming years, industry experts say, as Cambodia fetes 100 years of domestic rubber plantations.
The French protectorate planted the first trees in what is now Preah Sihanouk province in 1910. By 1924 plantations were moving further inland to Kampong Cham province – which today is the heart of Cambodia’s natural rubber industry.
Chub rubber plantation – presently the Kingdom’s largest – now covers 17,000 hectares in Kampong Cham, producing between 33 and 38 tonnes of rubber per day. All of its trees date from 1986 or later, except for fifteen hectares of old trees that have been preserved since 1924.
The site has become a tourist attraction, but also draws back former workers to see the rubber plantations they worked on before the Khmer Rouge. Chub protects the trees standing on the fifteen hectares by regularly clearing back the brush.
“We preserve these trees from vanishing,” says Chub technical director Meas Meannith.
“They are evidence of the beginning of rubber in Cambodia. If we cut the trees down, we lose an important mark in the line of events since the beginning.”
Ly Phalla, general director of the General Directorate of Rubber, says cultivation originally began in coastal areas, but Kampong Cham’s strong growing conditions had made it the centre of the domestic industry.
By 1979, domestic rubber plantations totalled 45,750 hectares, largely left over from the French regime. Today it totals 166,750 hectares, and could reach 250,000 hectares by 2015, according to Chub managing director Mak Kim Hong.
But the industry in Cambodia is still small compared to many neighbouring countries. The Association of Natural Rubber Producing Countries – which claims its members constitute 92 percent of global output – compiled statistics showing Cambodia produces less than 0.5 percent of the association’s total. Thailand and Indonesia each produce close to one third of the Association’s output.
Nevertheless, experts say the domestic sector has strong upside potential.
Agriculture is the traditional backbone of Cambodia’s economy, according to Leopard Capital CEO Douglas Clayton.
“[It] is a great sector to develop now that commodity prices are trending upwards,” he says.
“Rubber will once again become an important industry here just as it was before the war, when Cambodia used to manufacture tyres.”
Rubber prices hit an all-time high this month, selling for over US$5,000 per tonne in trading on the Malaysian Rubber Exchange this week. Prices have risen rapidly this year as demand outstrips supply. A tonne fetched $2,955 on the last day of trading in 2009.
Recently, persistent rains have hit supply among major exporters, including Thailand, the world’s largest, while international demand remains strong.
After the Khmer Rouge period brought production to a halt, the domestic industry was restarted in 1979 by seven state-owned companies, including Chub, which were later privatised by 2008.
However, though many point to strong prospects for the future of Cambodian rubber, the sector is not without its challenges.
One problem, Clayton says, is that much of Cambodia’s best farmland is tied up under long term concessions to speculators with no intention of farming.
“The government should steadily increase taxes on concession that haven’t fulfilled their business plans,” he says.
Domestic rubber producers have also complained of difficulties in measuring market data, claiming fewer available means to store rubber and arrange future contracts can put them at a disadvantage.
Cambodia’s rubber industry enjoys several advantages, such as lower wages and a business-friendly government, though other costs remain higher, according to Mak Kim Hong. Electricity, and petrol used for transport are often more costly than in neighbouring countries, he says.
Prominent Cambodian businessman Mong Reththy has advocated building rubber plantations near the coast, where the original French rubber plantations first sat 100 years ago. The scheme has its pros and cons, according to Mak Kim Hong. On one hand, the cost of transporting the rubber to Sihanoukville port for export is lower, but on the other hand, stronger winds and rains could make cultivation more challenging.
A plastic rain guard can be fitted to protect tapped trees from the rain, but the wind is more difficult to protect against. Kampong Cham’s rusty-coloured soil is also superbly suited to rubber.
“Red soil is rich soil,” Mak Kim Hong says.
Another major obstacle to increasing production has been convincing the world of the quality of Cambodian rubber.
Cambodian rubber fetched some 20 to 25 percent less than prices for Malaysian rubber in the 1990s, Mak Kim Hong says, but he claims the gap is closing.
Cambodia has joined several international organisations in a bid to earn global recognition of its produce. The Association for Rubber Development of Cambodia has joined the ASEAN Rubber Business Council, for instance – a six-member organisation it joined ahead of regional rubber producers Laos or the Philippines.
The ARBC and other organisations have provided a forum for Cambodia to showcase the quality of its products.
Last week, Chub plantation rubber earned the ISO 9001:2008 certification from the QMS Australia standards company, which Mak Kim Hong claims is the highest standard ever obtained by a Cambodian rubber producer.
“This certificate has more conditions, very strict conditions [governing the quality of our rubber],” he says. “We can sell for higher prices with this certificate.”
During a visit to Phnom Penh this month, France’s Secretary of State for Foreign Trade Pierre Lellouche said that French expertise had played a role in helping establish a successful industry in Cambodia. The French Embassy held an event to mark the 100-year anniversary during his visit.
Yet despite rubber’s century-long history in the Kingdom, some in the industry claim little knowledge of the sector’s past.
Quickly tapping trees in Kampong Cham’s Tboung Khmum district, 20-year-old rubber worker Sin Sreylen told The Post she had never asked why there were so many rubber trees growing in Kampong Cham.
But local life revolves around the rubber plantation, she says.
She was born on a rubber plantation, and has lived to see the constant cycle of worn-out trees being cut down and replanted. She said she had noticed an increase in local living standards on the back of the burgeoning rubber industry.
“I used to hear my parents complain about difficulties making ends meet, but now I never hear those complaints,” she said. “I hope in the future that more rubber trees will grow and I will get more work and a higher salary.”

(Source: http://www.phnompenhpost.com/index.php/2010123045788/Business/a-new-century-for-rubber.html)

Spot rubber rules steady

Kottayam, Dec. 30

Spot rubber continued to rule almost steady on Thursday. Expectations on an improvement in arrivals during the ongoing peak production season kept the buyers on sidelines but the market managed to close unchanged lacking quantity sellers in major grades. The trend was partially mixed as RSS 5 lost ground on comparatively low demand and better supply.

Sheet rubber finished unchanged at Rs 206 a kg, according to traders. The grade weakened to Rs 206.50 (207) a kg both at Kottayam and Kochi, according to the Rubber Board.

Futures drop

RSS 4 declined with January series slipping to Rs 208.24 (209.43), February to Rs 213 (214.15), March to Rs 217.15 (218.18) and April to Rs 223.21 (224.21) a kg on the National Multi Commodity Exchange. The volumes totalled 4336 lots and open interest 8999 lots. The turnover was Rs.92.32 crore.

RSS 3 (spot) slipped to Rs 224.07 (224.13) a kg at Bangkok. The January futures for the grade weakened to ¥403.6 (Rs 222.62) from ¥404.5 a kg during the day session on the Tokyo Commodity Exchange (TOCOM).

Spot rates were (Rs/kg): RSS-4: 206 (206); RSS-5: 198 (199): ungraded: 195 (195); ISNR 20: 204 (204) and latex 60 per cent 138.50 (138.50).

(Source: http://www.thehindubusinessline.com/2010/12/31/stories/2010123152111600.htm)

Rubber price Update: 29 December 2010

(Source: Irco.biz)

TYPE	21-Dec	20-Dec	(+/-)	Compared to 1 week ago	Compared to 1 month ago	Compared to 1 year ago
DCP (US cents/kg)	493.28	490.26	+3.02	+43.76	+66.61	+222.46
14-Day Moving Average of DCP (US cents/kg)	476.69	473.56	+3.13	+41.23	+45.14	+220.04
FUTURES MARKETS
TOCOM/RSS3 (Yen/kg)
- Feb 11	405.00	403.80	+1.20	+33.40	+46.90	+166.50
- Jun 11	411.00	407.80	+3.20	+30.70	+55.80	+161.70
SHFE/RSS3 (Yuan/ton), May 11	36,080	36,610	-530	+3,010	+5,285	+14,355
SICOM (US cents/kg)
- RSS3, Feb 11	497.00	493.50	+3.50	+40.00	+68.00	+222.50
- TSR20, Feb 11	492.00	490.00	+2.00	+45.00	+73.00	+221.50
AFET (THB/kg)
- RSS3, Jul 11	148.10	145.55	+2.55	+10.40	+19.60	+56.40
PHYSICAL MARKETS (US cents/kg)
SIR20 (FOB/Palembang), Jan 11	493.50	494.50	-1.00	+46.50	+64.50	+224.50
SMR20 (FOB), Jan 11	484.80	485.30	-0.50	+41.80	+65.30	+219.20
RRIT (THB/kg)
RSS3 (FOB/BKK), Jan 11	149.80	149.80	+0.00	+12.50	+18.00	+59.10
STR20 (FOB/BKK), Jan 11	149.25	149.25	+0.00	+14.25	+19.25	+59.75
Conc. Latex (FOB/BKK), Jan 11	95.05	95.05	+0.00	+4.00	+7.00	+38.05
USS3 (Hat Yai), Jan 11	137.87	138.06	-0.19	+10.70	+19.61	+56.89
Field latex (Hat Yai), Jan 11	130.00	133.00	-3.00	+4.00	+6.50	+52.00

Rubber Increases, Posting Second Annual Advance, on Supply Deficit Concern

Rubber extended gains to post a second straight annual advance on concern that a shortage may worsen early next year as top exporter Thailand enters a low- production period known as wintering.

The June-delivery contract added as much as 0.9 percent to 414.8 yen per kilogram ($5,094 a metric ton) on the Tokyo Commodity Exchange and closed at 414.5 yen, bringing this year’s gain to 50 percent. The bourse will be closed from tomorrow and resume trading on Jan. 4.

Latex production in Thailand is set to shrink as growers reduce tapping of rubber trees from February to April. The seasonal drop in output may worsen a supply shortage as global demand rises, led by car sales in China and India. Rubber climbed to a record 419.3 yen on Dec. 27.

“Concern over tight supply continued lending support to the market,” said Takaki Shigemoto, an analyst at research company JSC Corp. in Tokyo. A rebound in oil prices also pushed rubber higher, reversing its early 1.8 percent decline, Shigemoto said.

Crude oil for February delivery rose as much as 0.2 percent to $91.33 a barrel on the New York Mercantile Exchange after losing 0.4 percent yesterday. The contract touched $91.88 on Dec. 27, the highest level since Oct. 7, 2008.

Rubber futures declined earlier as China, the world’s biggest consumer, may take measures to curb speculation, said Toshimitsu Kawanabe, an analyst at commodity broker Central Shoji Co.

Supply Drop

China may increase the size of agricultural futures contracts in 2012 to curb speculation, the Shanghai Securities News reported today, citing no one. Contracts already being traded will expire by the end of 2011 and the new contracts are still being studied, the report said. Raising the sizes will increase the amount of capital required for trading and keep some speculators out of futures markets, it said.

Supply of natural rubber from nine producers representing 92 percent of global output is expected to fall 6.3 percent in the fourth quarter, cutting this year’s production growth to 5.7 percent, from 6.6 percent forecast in November, the Association of Natural Rubber Producing Countries said in its monthly bulletin.

Output from the association’s members is estimated at 9.42 million tons this year and may climb to 9.92 million next year, the group said.

May-delivery rubber in Shanghai advanced 0.8 percent to close at 36,545 yuan ($5,534) a ton. The price has retreated from a record 38,920 yuan on Nov. 11 amid concern that China may take steps to cool inflation and economic expansion.

The cash rubber price in Thailand was unchanged at a record 149.55 baht ($4.96) per kilogram today as persistent rains in the country’s southern provinces limit supplies, according to the Rubber Research Institute of Thailand’s website.

(Source: http://www.bloomberg.com/news/2010-12-30/rubber-declines-trimming-annual-increase-as-china-may-curb-speculation.html)

Demand perks up latex prices

Kottayam, Dec. 29

Spot rubber prices were almost steady on Wednesday. The market lost its direction on buyer resistance, as major players were hesitant to enlarge their commitments, possibly expecting an improvement in domestic supplies. Meanwhile, latex 60%, the only gainer of the day, closed firm on fresh demand. The volumes were dull.

According to traders, sheet rubber finished flat at Rs 206 a kg, amidst scattered transactions. The grade firmed up to Rs 207 (206.75) a kg, both at Kottayam and Kochi, according to the Rubber Board.

Among other reports, the key Tokyo rubber futures recovered partially on short-covering due to supply concerns prior to the long holidays, as the exchange will remain closed from December 31 to January 3. The most active Shanghai May futures closed weak at 36,030 yuan a tonne, down from Monday's close of 37,110 yuan.

Futures up

In futures, the January series improved marginally to Rs 209.56 (209.32), February to Rs 214.12 (213.96), March to Rs 218.35 (217.96) and April to Rs 224.40 (223.99) a kg for RSS 4 on the National Multi Commodity Exchange.

RSS 3 (spot) closed at Rs 224.13 (224.04) a kg at Bangkok. The January futures for the grade increased to ¥ 404.5 (Rs 222.17) from ¥ 401.9 during the day session and then to ¥ 406.5 (Rs 223.27) in the night session on the Tokyo Commodity Exchange.

Spot rubber rates (Rs/kg) kg were: RSS-4: 206 (206); RSS-5: 199 (199); Ungraded: 195 (195); ISNR 20: 204 (204); and latex 60%: 138.50 (137).

(Source: http://www.thehindubusinessline.com/2010/12/30/stories/2010123052051800.htm)

Tokyo rubber futures bounce back

Singapore (december 30, 2010) : tokyo rubber futures ended higher on wednesday as crude oil held steady ahead of inventory data, but a firm yen capped gains as trading activity began to slow down ahead of year-end holidays. the most active contract on the key tokyo commodity exchange, currently june 2011, settled 3.3 yen a kg a higher at 411.1 yen, having fallen more than 2 percent the previous day.
tokyo futures rallied to a record of 419.3 yen on monday. "since we are heading towards the year-end holidays, i would expect some profit taking activities to set in," said ker chung yang, an investment analyst at phillip futures in singapore. "the yen is actually strengthening against the dollar. this is not a good sign for tocom rubber to gain further momentum upward."
in shanghai rubber futures, the most active may contract ended at 36,255 yuan per tonne, up from tuesday's close of 36,030 yuan. volume was moderate at around 704,000 lots. thai rss3 grade jumped to an historic high on monday to track a rally in tokyo futures, while tyre makers were chasing nearby cargo despite rising prices due to supply disruption in southeast asia, dealers said on monday.

Wednesday, December 29, 2010

Buoyant year ahead for natural rubber

PETALING JAYA: Rubber prices, which hit many new historic highs over the past two months, are set to extend their rally into the first quarter of next year on a prolonged tight supply situation, says industry experts.

Currently, local rubber grades SMR 20 and latex-in-bulk are trading at record levels of RM15 and RM9.93 per kg respectively.

Malaysian Rubber Board director-general Datuk Dr Salmiah Ahmad toldStarBiz that the bullishness in rubber prices was principally fuelled by a tight supply situation, speculation in rubber futures, Thailand's imposition of a new cess effective Oct 1 and dwindling stocks in major producing and consuming countries.

She said traders in the producing and consuming regions had reported strong market fundamentals following the lack of physical supplies and record low levels of stocks at private warehouses in consuming nations.

In recent months, output has also been affected by abnormal rainfall.

Meanwhile, local rubber prices were also boosted by the strengthening of the ringgit.

In fact, the natural rubber (NR) price trend since 2006 had seen many new highs, supported by concerns over supply tightness, firm crude oil prices and speculation over a shortfall in production and strong demand.

On the near-term outlook, Salmiah said: “The seemingly unstoppable growth in China and India, coupled with anticipated higher average oil prices in 2010, point towards a buoyant year ahead for NR.”

She added that higher rubber prices were expected in 2011. The current heavy rain falls and floods in producing countries, coupled with tsunami wrecking parts of Indonesia, had affected production in the final quarter of 2010.

“This will be followed by the seasonal lull of leaf shedding or wintering from January to March, reducing total output by some 30% to 40%.

“In this scenario, major consumers will be making plans to replenish their much-depleted inventories in the months ahead,” added Salmiah.

The low stock levels worldwide will be also another plus point for NR price.

Salmiah pointed out that rubber stock levels were at an all time low at least in a decade. The current stock level is equivalent to about five to six weeks of world demand compared with two to three months previously.

China and India would remain important markets for NR as their “automobile industries are poised to register double-digit growth over the next couple of years.”

Association of Natural Rubber Producing Countries (ANRPC) senior economist Jom Jacob concurred that sentiment in the NR market would be dominated by the uncertainty in supply.

According to ANRPC's latest NR trends and statistics report, the severe supply situation would likely be aggravated from February to May 2011, period which coincides with the annual wintering of rubber trees.

“The current spike in the NR market has also been driven by an improved economic outlook, coupled with higher import demand from China, which registered annualised increases of 58% and 65% in October and November this year respectively.

“As the consuming industry normally goes for large volume purchases before the supply enters the wintering season (starting end of February), the demand is likely to gain further momentum in January next year,” he added.

In addition, the surge in crude oil price had also been a key driver of the present bull-phase in the NR market. According to oil industry analysts, there was a possibility of oil reaching US$100 per barrel by early 2011.

The NR market is also not immune to the increasingly speculative nature of investments in the commodity markets.

According to Jacob, total rubber supply from ANRPC's nine member countries is anticipated at 9.42 million tonnes in 2010 and 9.92 million in 2011 “if the climate takes its normal pattern”.

ANRPC members contribute about 92% to total world NR production.

On Malaysia, the world's third-largest rubber producer, Jacob said the NR supply usually took a seasonal drop from end of February until May every year, which coincides with leaf shedding by trees in summer.

“Supply during these months normally shrinks 60% to 70% of the levels during peak seasons,” he added.

He estimated that 48% of the global demand for NR comes from China, India and Malaysia the top three NR-consuming countries within the ANRPC grouping.

(Source: http://biz.thestar.com.my/news/story.asp?file=/2010/12/29/business/7695871&sec=business)

Demand Likely to Increase, So Don't Tire of Rubber

Few tread on the subject, but it is strange how one of mankind’s earliest and most important inventions, the wheel, has come to depend on the congealed sap of a tropical tree to be really useful. Furthermore, while synthetic rubber has been around for the better part of a century, it does not compare to the natural latex in terms of durability and heat resistance; you would not want to land in an airplane equipped with synthetic rubber tires.
As a tropical tree, rubber’s zone of production is confined to its native areas in South America and primarily to the colonial plantations established in what are now Malaysia and Indonesia. You might think this confined geography coupled with an ever-increasing global population of tires would lead to surging prices for smoked rubber sheets. Not so: Even after a substantial bounce to nominal record prices for rubber, the average annual increase in constant-dollar terms since 1947 has been 0.64%.
Now that China has become the world’s largest automobile market and other Asian markets are certain to increase their demand for tires, not to mention the TSA increasing its demand for gloves, the rubber market has become particularly sensitive to any disruption in supply such as the unexpectedly heavy monsoon rains in Thailand. Memo to file: How can a monsoon rain be unexpectedly heavy? Oh well.
The chart of constant-dollar continuous front-month rubber futures traded on the Tokyo Commodity Exchange tells us what we need to know.

Do not, however, try to play the price of rubber via tire manufacturers. Let’s take the relative performance of two non-Asian tire manufacturers, Goodyear (GT) here in the US and Michelin in France, to their respective national stock market indices. Both have underperformed substantially, with Goodyear looking particularly bedraggled over the past decade. And don't be deceived by the recent World Trade Organization ruling China has been dumping tires; the surest way to consign any industry to the long-term scrap heap is to give it a wall of tariffs, countervailing duties, import quotas, or surly Customs officials working on its behalf. The US automobile and steel manufacturers tried this and spent decades being second-rate.

As most rubber is grown on large plantations, you could get adventuresome and try your hand on exchanges in Sri Lanka, Indonesia, or Malaysia; the less-adventuresome can try plantation stocks listed in London such as Anglo-Eastern Plantations or Narborough Plantations. Then go out and get yourself a Sydney Greenstreet costume just to complete the investment, and limit your libations to Pimm’s Cup and gin-and-tonics, extra quinine to ward off the malaria plasmodium.
The TOCOM futures are probably the most liquid and regulated of the rubber futures markets, but unless you intend to work Tokyo hours, you probably shouldn't try this yourself.
Regardless, until some enterprising genetic engineer figures out a way to produce rubber latex out of dandelion sap -- yes, this is an avenue of research -- the rubber market should remain strong as the demand for tires can increase faster than the amount of land devoted to rubber plantations.

(Source: http://www.minyanville.com/businessmarkets/articles/rubber-industry-rubber-manufacturing-rubber-manufacturer/12/29/2010/id/31820)

Rubber to remain highly volatile amid supply woes

KOCHI: After a year that saw natural rubber prices surge to record levels, consumers of the commodity would like to believe that the worst is over.
In fact, the key stakeholders in the sector are of the view that supply uncertainties and price volatility would turn out to be a rule rather than an exception in the year ahead.
The domestic prices of natural rubber rose by almost 50% to a record high of `207.50 per kg on last Thursday compared to the same period of the previous year. Supply concerns, both at the global as well as domestic levels, were the major factors behind the sharp acceleration in prices.
Even as the industry hopes that normalcy would return to the overheated rubber market across the world, there is a growing concern about the difficult days ahead. “2011 is likely to be yet another challenging year for natural rubber consumers,” said Neeraj Kanwar, vice chairman and managing director of Apollo Tyres. According to him, while in the short-term “the limited supply of natural rubber will cast a shadow on the price front, its long-term availability will be a key concern which needs to be addressed on priority”.
The supply uncertainties of rubber, a key industrial raw material, have been aggravated by the climatic changes happening across the key producing countries. A prolonged spell of rains disrupted production in India this year, leading to tight supplies and rising prices. Internationally, leading global producers like Thailand and Indonesia also had to cut back on production due to heavy rains and floods.
“2010 was a difficult and abnormal year,” said Rajiv Budhraja, director general of Automotive Tyre Industries Association (ATMA), adding that he hoped the coming year would be “balanced and normal”. “We hope that what has happened in 2010 would get corrected in 2011,” he added.
But not all are optimistic about the restoration of normalcy in the near future. Kottayam-based analyst and trader Biju John, proprietor of CPM Spices Corporation, said that the “rubber sector is entering the new year with low stocks”. According to him, “if changing climatic conditions lead to cut backs in production in 2011, the prices could go through the roof.”
CP Krishnan, director of Geojit Comtrade Ltd, a leading broking company, also said that “climatic factors and demand conditions could be the price setters in the coming days”. According to him, the international prices have shot past the domestic prices, making it all the more difficult for the user industries in the country. The estimated shortfall in supply during this fiscal is around 85,000 tonne.
Meanwhile, the government has allowed the industry to import 40,000 tonne at a concessional duty of 7.5% by March 31. After that the duty has been capped at 20% or `20 per kg. This has been the industry’s demand for a long time. However, currently, the international prices are higher, making imports unviable. The industry hopes to contract imports early next year for meeting the requirements for the lean season starting April. But the uncertainties in supply could send the industry’s calculations haywire.

(Source: http://economictimes.indiatimes.com/markets/commodities/rubber-to-remain-highly-volatile-amid-supply-woes/articleshow/7187424.cms)

Demand perks up latex prices

Kottayam, Dec. 29

According to traders, sheet rubber finished flat at Rs 206 a kg, amidst scattered transactions. The grade firmed up to Rs 207 (206.75) a kg, both at Kottayam and Kochi, according to the Rubber Board.

Futures up

Spot rubber rates (Rs/kg) kg were: RSS-4: 206 (206); RSS-5: 199 (199); Ungraded: 195 (195); ISNR 20: 204 (204); and latex 60%: 138.50 (137)

(Source: http://www.blonnet.com/2010/12/30/stories/2010123052051800.htm)

G-lovely growth

Malaysia is set to post record rubber glove exports for the eighth straight year in 2010, driven by higher global demand for medical gloves.

Rubber glove exports are due to grow 23 per cent to RM8.8 billion this year, said The Malaysian Rubber Glove Manufacturers Association (Margma).
For the last 15 years, Malaysia has been the world's top supplier of rubber gloves. Last year, the country exported close to 100 billion pieces of rubber gloves to more than 180 countries.
This volume makes up two-thirds of the global market for rubber gloves. Healthcare products like medical gloves continue to see strong demand despite the current lacklustre global economic growth.
"Rubber gloves, be they natural rubber or synthetic, are a necessity in the healthcare and food-handling sectors," Margma president Lee Kim Meow said in a recent interview.

"We expect further growth on the back of rising healthcare awareness in emerging markets, especially in China, India and the Latin American countries," he said.
This is because emerging markets currently spend less on healthcare compared with developed nations like the US, Europe and Japan.
Despite the strong headwinds buffeting the industry, Lee is optimistic that next year's global glove exports from Malaysia will expand by 10 per cent to 108 billion pieces.
Latex cost, which used to be 55 per cent of the total production cost, has swollen to more than 65 per cent since the sudden spike in natural rubber prices over the last three months.
Currently, the average rubber glove selling price is at US$32 per 1,000 pieces, about 23 per cent higher than a year ago.
Lee said Margma members are likely to keep raising rubber glove prices in tandem with the rising latex prices and the weakening US dollar.
Natural rubber latex prices have risen by 65 per cent from an average of RM6 a kg from a year ago. Yesterday, it closed at RM9.89 a kg.
The US dollar, currently trading at RM3.09, has also weakened against the ringgit by 10 per cent compared with RM3.45 about 10 months ago.
Costly natural rubber latex have prompted many glovemakers to produce less natural rubber gloves and more of the synthetic variant.
This trend bodes well with Kuala Lumpur Kepong Bhd (KLK) as it seeks to tighten its grip on the world’s supply of nitrile latex, which is mainly used to make synthetic gloves.
KLK, which holds 19 per cent of Yule Catto & Co plc, supports the UK firm’s buy of Germany’s PolymerLatex Group for e443 million (RM1.8 billion). Chemical maker Yule Catto, listed on the London Stock Exchange, is the owner of the Synthomer Group’s polymers business.
Synthomer’s unit in Malaysia runs a 130,000-tonne-per-year nitrile plant in Kluang, Johor. On the other hand, PolymerLatex operates a 100,000-tonne-a-year plant in Pasir Gudang, Johor.
When asked to comment on KLK and Yule Catto’s decision, Lee replied: “We welcome the move. Our members look forward to see how Yule Catto can offer a wider variety of feedstock to work with.
“We’re actually not short of nitrile latex suppliers,” he said, adding that Bangkok Synthetics Co Ltd is planning to put up a 110,000-tonne a year plant at Rayong province in southern Thailand.
The plant is scheduled to supply nitrile latex to rubber glove makers in Thailand, Malaysia and Indonesia by the third quarter of 2012.
(Source: G-lovely growth http://www.btimes.com.my/articles/9Bglove-2/Article#ixzz19XqOVE2T)

Tuesday, December 28, 2010

Slowing NR Prices On High Records

It is shown in the table that the NR prices in most futures markets were quite closed high on the 24 and 27 December 2010. That is because of momentum of rising high NR prices from earlier days.

Things have been changed on 28 December 2010 because both major markets followed the move on Shanghai Futures Exchange and most weaker–sentiment investors in SHEF were aware of the Chinese Central Bank, which decided to increase the interest rate over the past weekend to tackle its rising inflation.

ESCRIPTION	24 DEC	27 DEC	28 DEC	CHANGE **	% CHANGE	UNIT
IRCo's DCP	491.11	492.72	490.26	-0.85	-0.17%	US cents/kg
TOCOM/RSS3 *
- Jan. 11	407.00	411.20	401.90	-5.10	-1.25%	Yen/kg
- Jun. 11	416.60	417.60	407.80	-8.80	-2.11%	Yen/kg
SHFE/RSS3 ***	37,045	37,215	36,610	-435	-1.17%	Yuan/ton
AFET/RSS3
- Jan. 11	148.00	148.00	145.80	-2.20	-1.49%	THB/kg
- Jul. 11	149.10	147.70	145.50	-3.60	-2.41%	THB/kg
RRIT ****
- RSS3	149.30	149.80	149.80	0.50	0.33%	THB/kg
- STR20	148.75	149.25	149.25	0.50	0.34%	THB/kg
SIR20 *****	496.00	496.00	495.00	-1.00	-0.20%	US cents/kg
SMR20 *****	496.00	493.00	487.00	-9.00	-1.81%	US cents/kg

Source: IRCo

Note: * Day session

** Change between 24 and 28 Dec.

*** The highest daily trading volume was May 2011

**** RRIT means Rubber Research Institute of Thailand

***** Offer, f.o.b., Asian physical rubber prices for Jan./Feb. delivery, Dow Jones

Where the correction made in SHEF was leading to affect the TOCOM prices down with stronger Japanese YEN and traders’ cut-loss strategies.

According to Dow Jones, benchmark June NR futures on TOCOM settled at JPY407.80 a kilogram or else 2.3% lower and JPY9.8 down. This was due to the strong YEN having been keeping high against the US dollar for the last three weeks. This settlement incurred after the TOCOM’s NR prices have reached a fresh high record for the sixth straight trading session.

(Source: http://www.irco.biz/BlogMoreDetial.php?id=2719&ShowContent=news%20&PHPSESSID=e92079f943a2dc0f1cc2fb791c1bcd0f)

Rubber Advances to Near Record as Buyers Lured by Yesterday's Price Tumble

Rubber climbed to near a record on speculation that a price slump yesterday may lure buyers.

The June-delivery contract advanced as much as 1.1 percent to 412.2 yen per kilogram ($5,010 a metric ton) on the Tokyo Commodity Exchange and was at 409.9 yen at 12:15 p.m. local time. The price tumbled 2.4 percent yesterday, the biggest drop since Nov. 24. The most-active contract climbed to a record 419.3 yen on Dec. 27.

“It’s a rebound after yesterday’s sharp decline,” said Hiroyuki Kikukawa, the general manager of research at IDO Securities Co. in Tokyo. Gains may be limited as the yen strengthened against the dollar, reducing the value of the Japanese currency-based futures, he said.

The dollar traded near a six-week low against the yen as U.S. data signaled an uneven recovery in the world’s largest economy. The yen gained as much as 0.2 percent to 82.25 per dollar before trading at 82.34 by 10:37 a.m. in Tokyo.

The Institute for Supply Management-Chicago Inc. will say tomorrow its business barometer fell to 61 this month from 62.5 in November, according to the median estimate of economists in a Bloomberg News survey. Figures greater than 50 signal expansion.

U.S. consumer confidence fell in December to 52.5, lower than the most pessimistic forecast of economists surveyed by Bloomberg News, figures from the Confidence Board showed yesterday.

Supply Concerns

The rubber market has been supported by expectations that a supply shortage may worsen early next year as top exporter Thailand enters a low-production period, Kikukawa said.

Output from the association’s members is estimated at 9.42 million tons this year and may climb to 9.92 million next year, the group said.

The tight supply situation continues in Thailand, Indonesia and Malaysia ahead of the low-production, or wintering, season, Ker Chung Yang, an analyst with Phillip Futures Pte, said by phone from Singapore. “Supply concerns will keep speculative flows in the market,” he said.

Latex production in Thailand is set to shrink as growers reduce tapping of rubber trees from February to April. The seasonal drop in output may worsen a supply shortage as global demand will keep rising, led by car sales in China and India.

May-delivery rubber in Shanghai rose 0.6 percent to 36,255 yuan ($5,472) a ton. The price retreated from a record 38,920 yuan on Nov. 11 amid concern that China may take steps to cool inflation and economic expansion.

The cash rubber price in Thailand remained at a record 149.55 baht per kilogram yesterday, according to the Rubber Research Institute of Thailand.

(Source: http://www.bloomberg.com/news/2010-12-29/rubber-advances-to-near-record-as-buyers-lured-by-yesterday-s-price-tumble.html)

Rubber Declines From Record as Strengthening Yen Weakens Contract Appeal

Rubber declined as investors sold the commodity to lock-in gains after it climbed to a record for a sixth day and as a stronger Japanese currency weakened the appeal of yen-denominated contracts.

June-delivery rubber lost as much as 2.6 percent to 406.6 yen per kilogram ($4,933 a metric ton), the lowest level since Dec. 20, before settling at 407.8 yen on the Tokyo Commodity Exchange. The most-active contract climbed to a record 419.3 yen yesterday, extending this year’s advance to 51 percent.

The dollar dropped to a three-week low against the yen after China raised interest rates for the second time in two months. China’s stocks fell for a fifth day, the longest losing streak since July, on concern the government will raise interest rates further to curb inflation.

“A higher yen spurred sales as the market was ripe for profit-taking,” Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said today by phone. “Concern about further rate increase in China is another drag on futures.”

The Shanghai Composite Index slid 0.9 percent to 2,756.197 at 2:18 p.m. local time, extending yesterday’s 1.9 percent drop, after the People’s Bank of China increased key one-year lending and deposit rates by a quarter percentage point on Christmas Day.

May-delivery rubber in Shanghai dropped 2.5 percent to 36,180 yuan ($5,461) a ton 2:27 p.m. local time. It retreated from a record 38,920 yuan on Nov. 11 amid concern China may take steps to cool inflation and economic expansion.

“Investors’ response towards the rate increase was divided yesterday,” said Deng Changrong, a strategist at Huaxi Securities Co. in Shenzhen. “As the market moves downward, the pessimism and uncertainty seem to get stronger.”

Supply Shortage

Losses in rubber futures were limited by expectations a supply shortage may worsen early next year as top exporter Thailand enters a low-production period, Saito at Fujitomi said.

Latex production in Thailand is set to shrink as growers will reduce tapping of rubber trees from February to April during the so-called “wintering” period. The seasonal drop in output may worsen a supply shortage as global demand will keep rising, led by car sales in China and India.

The cash rubber price in Thailand stayed at a record 149.55 baht per kilogram today after rising 0.3 percent yesterday, boosted by limited supply from the country’s southern provinces amid strong demand for tires, according to the Rubber Research Institute of Thailand.

China Cars

China’s sales of passenger cars including multipurpose and sport-utility vehicles increased 29.3 percent to 1.34 million last month, higher than the previous record of 1.32 million in January, according to the China Association of Automobile Manufacturers. The pace of growth was the fastest since April.

The yen gained to 82.42 per dollar at 3:32 p.m. in Tokyo from 82.81 yesterday. The dollar also came under pressure on speculation a U.S. report today will show home prices fell.

The median forecast of a Bloomberg News survey of economists showed the S&P/Case-ShillerIndex of property values dropped 0.2 percent in October from a year earlier, the first decline since January.

China’s central bank raised one-year lending and deposit rates by 25 basis points on Dec. 25 in its second move since mid-October. China may raise rates as many as three times in the first half of next year, according to Morgan Stanley, while JPMorgan Chase & Co. forecasts two increases in that period.

China reported an inflation rate of 5.1 percent for November, the highest in 28 months. Exports last month reached a record $153.3 billion and the trade surplus exceeded $20 billion for the fifth time in sixth months, indicating a recovery in international trade from the global financial crisis.

(Source: http://www.bloomberg.com/news/2010-12-28/rubber-declines-from-record-as-strengthening-yen-weakens-contract-appeal.html)

Q4 global natural rubber supply seen down 6.3%

Kochi, Dec. 28

Global natural rubber supply is expected to slip 6.3 per cent during the fourth quarter – October-December. Based on lower production estimates from major producing countries such as Thailand, India and Vietnam, the Association of Natural Rubber Producing Countries (ANRPC), which accounts for 92 per cent of the global rubber output, has further pruned rubber production estimates. Earlier, it had projected a shortfall of 3.8 per cent for the quarter.

According to the latest estimates, Indian rubber production is expected to fall 4.6 per cent from 1.8 per cent for the quarter. Vietnam, which was expected to register a growth of 3.8 per cent, is now expected to witness a fall of 2.8 per cent. However, Thailand is expected to witness the sharpest fall of 33.4 per cent, down from the earlier 28.4 per cent. Thailand, Vietnam and India are the only three countries that will record negative growth in the fourth quarter.

Consequent to this revision, the global growth in natural rubber supply this year is expected to be contained at 5.7 per cent, lower from the 6.6 per cent expected earlier. The projection of accelerated global supply growth is based on output increase of 17.9 per cent registered in the first quarter, 2.8 per cent in the second and 12.3 per cent in the third.

The global natural rubber production, mainly from ANRPC countries, is now estimated at 9.422 million tonnes (mt) this year. This is expected to increased 5.3 per cent to 9.918 mt next year, provided there is not much variation in global weather conditions.

India has scaled down the country's expectation of natural rubber supply growth to three per cent this year at 8,45,000 tonnes. Reports till last month had indicated that rubber supply would grow by four per cent to 8,53,000 tonnes. The country's supply has been badly affected by unseasonal rains in the fourth quarter, which also happens to be the flush season for natural rubber supply, the ANRPC said.

Lean season

However, the Rubber Board now anticipates India's yielding area to expand by 14,000 hectares as area under rubber which was planted seven years ago has now become productive. This is expected to accelerate production by 5.3 per cent to 8,90,000 tonnes. The constraints on India's natural rubber production are characterised by long lean season spanning seven continuous months with low output.

The leaf shedding season also results in production dip which can last in the summer months. The onset of the South-West monsoon also affects tapping operations and rubber output during June-August. In effect, rubber output during the lean months can come down by 50-60 per cent of the peak production period, the ANRPC said.

Consumption of natural rubber by major consuming countries is also expected to rise this year. Between them, countries such as China, India and Malaysia account for over 48 per cent of the global rubber consumption. Consumption by China is expected to increase 8.6 per cent during the current year, while India is expected to register a growth of 5.1 per cent and Malaysia 2.2 per cent.

India is expected to top in imports, estimated at 14 per cent, while China is likely to register 10 per cent growth even as Malaysia's imports are expected to slow down by 5.3 per cent, the ANRPC said.

(Source: http://www.blonnet.com/2010/12/29/stories/2010122951051600.htm)

ndia, China demand to keep up rubber in 2011: Thailand

BANGKOK (Commodity Online) : World’s leading rubber producer and exporter Thailand said, fast growing economy India’s demand along with China could keep rubber prices up for next year as well.
According to Ananta Dalodom, Thailand’s former director-general of the Agriculture Department, rubber prices are expected to stay well above 100 baht per kilogramme.
Demand has shifted to China and India from the United States and Japan during the past three years, making China the largest importer at 2.7 million to 2.8 million tonnes, driven by high growth in the automotive sector.
Demand from India keeps rising due to its economic growth, as India plans to construct roads covering up to 200,000 kilometres using natural rubber as part of the material.
Raw rubber sheet prices are now quoted at 138 baht per kg, while smoked ribbed rubber sheets No 3 (RSS3) were trading Monday in the Hat Yai cash market at 149.55 baht, with latex at 131 baht per kg.
Rubber prices have been rising steadily since 2002 when the raw rubber sheet price was 29.15 baht per kg, RSS3 was 30.23 baht and latex 30.49 baht.
"The prices are very high and have shown no signs of declining. Prices should remain at least 100 baht per kg from now on," said Dr Ananta.
Thailand, the world's largest exporter, produces around 3 million tonnes per year, accounting for 40% of world production, followed by Indonesia and Malaysia.
Dusit Rojanawanitchakorn, the owner of a 500-rai rubber plantation in Chon Buri province, said he now earned 1.5 million baht per month compared with an average of 800,000 baht per month last year, when prices of the raw rubber sheet during the same period were 90 baht per kg.
"These are the highest prices I've ever seen, and I think it will stay this way for at least two years," said Mr Dusit, adding that current prices were reasonable.
Kanda Chamchumrus, who owns a rubber processing plant, disagrees, saying the price surge is due mainly to speculation by large factories selling their products at high prices, which distorts prices and does not represent the real market.
"I have heard from rubber planters that they do not want excessive prices because they are afraid the system will fall through, as this will prompt users to shift to substitute products," said Mrs Kanda.
Prayong Hirunyawanich, chairman of the Federation of Thai Industries' natural rubber and rubberwood cluster club, said rising rubber prices had increased costs for businesses.
"Manufacturers cannot raise their product prices to pass on the higher costs, as the Commerce Ministry has called for price freezes to try to curb inflation," he said.

(Source: http://www.commodityonline.com/news/India-China-demand-to-keep-up-rubber-in-2011-Thailand-35050-3-1.html)

Rubber price Update: 28 December 2010

(Source: Irco.biz)

TYPE	21-Dec	20-Dec	(+/-)	Compared to 1 week ago	Compared to 1 month ago	Compared to 1 year ago
DCP (US cents/kg)	490.26	492.72	-2.46	+45.50	+60.77	+222.25
14-Day Moving Average of DCP (US cents/kg)	473.56	470.31	+3.25	+39.08	+43.18	+218.98
FUTURES MARKETS
TOCOM/RSS3 (Yen/kg)
- Feb 11	403.80	412.80	-9.00	+33.80	+41.50	+168.10
- Jun 11	407.80	417.60	-9.80	+30.60	+45.10	+160.80
SHFE/RSS3 (Yuan/ton), May 11	36,610	37,215	-605	+3,850	+4,635	+14,855
SICOM (US cents/kg)
- RSS3, Feb 11	493.50	498.00	-4.50	+40.70	+61.50	+222.00
- TSR20, Feb 11	490.00	493.00	-3.00	+49.00	+67.00	+223.80
AFET (THB/kg)
- RSS3, Jun 11	145.55	147.85	-2.30	+10.15	+16.55	+55.05
PHYSICAL MARKETS (US cents/kg)
SIR20 (FOB/Palembang), Jan 11	494.50	492.50	+2.00	+49.50	+66.50	+227.00
SMR20 (FOB), Jan 11	485.30	488.70	-3.40	+48.20	+61.15	+222.15
RRIT (THB/kg)
RSS3 (FOB/BKK), Jan 11	149.80	149.80	+0.00	+12.50	+18.00	+59.20
STR20 (FOB/BKK), Jan 11	149.25	149.25	+0.00	+14.75	+19.25	+59.95
Conc. Latex (FOB/BKK), Jan 11	95.05	95.05	+0.00	+4.50	+7.50	+38.20
USS3 (Hat Yai), Jan 11	138.06	138.76	-0.70	+11.90	+18.80	+57.45
Field latex (Hat Yai), Jan 11	133.00	131.00	+2.00	+8.00	+13.00	+57.50

Buoyant year ahead for natural rubber