Apollo Tyres raises tyre prices by 2-4 pct - official

MUMBAI (Reuters) - Apollo Tyres Ltd has raised product prices across categories by 2-4 percent to offset the surge in cost of rubber, a senior official said on Thursday.

"This is with effect from today, the quantum would vary across product lines," Chief Financial Officer Sunam Sarkar told Reuters over the telephone adding that the hikes are effective from Thursday.

Spot price of the most traded RSS-4 (ribbed smoked sheet) rubber has hit a record high of 15,650 rupees in Kottayam, Kerala, as per data compiled by the Rubber Board.

Natural rubber makes up over 40 percent of the total cost of a tyre.

Sarkar said a further round of price increase was required in coming months to combat the surge in costs.

Rival JK Tyre and Industries Ltd is also planning a price increase in the near term, A.S. Mehta, its director marketing, said.

"We have not yet revised. But we have to very soon," he said.

(in.reuters.com)

Tire makers see thin margins as costs soar

BEIJING: As rubber prices continued to rise and Chinese tire exports are hit by high US tariffs, tire makers in China have started to hike prices to offset increasing costs.

This week, natural raw rubber prices reached 24,800 yuan ($3,633) per ton, more than double the price of per ton at the beginning of last year.

Adding insult to injury, the serious drought in Yunnan province, which slashed in half output from China's major rubber production base, is also worsening rubber industry headaches.

During the past two weeks alone, Yunnan's natural rubber prices were inflated from 23,000 yuan to 25,000 yuan per ton.

The reduction in supply combined with rising rubber prices translates into raw material cost pressures for the downstream tire industry.

Retail tire prices across China have recently jumped by up to 10 percent per unit.

Hangzhou Zhongce Rubber Co, the largest rubber maker in China, recently raised its tire prices by 5 percent due to rising rubber and oil costs, according to the company.

Its competitors South China Tire & Rubber Co Ltd and Qingdao Double Star Tire Co Ltd followed suit, as the two manufacturers raised prices by 5 percent and 10 percent respectively.

For the second time this year, Shandong Linglong Group marked up prices by 6 percent after its first appreciation of 5 percent before the Spring Festival.

International brands like Bridgestone and Yokohama also introduced surcharges of around 10 percent on retail tire prices recently in China.

French tire maker Michelin told China Daily on Wednesday that it was they are also considering a price hike within a reasonable margin.

Zheng Wenrong, secretary -general of China Natural Rubber Association, agreed that industry demand coupled with a drop in natural rubber production led to the price hikes.

However, according to Chen Aihua, an analyst with Guosen Securities, the modest price increases will not cover manufacturers' huge expenditures for skyrocketing rubber.

"They are facing a hard time this year."

With 40 percent of sales coming from overseas and one third of exports going to the United States, China's tire makers found themselves in hot water as some countries - led by the US - imposed higher tariffs on Chinese tire imports since last year.

The move was considered trade protectionism by the Chinese government as well some industry and trade experts.

Recent Customs statistics show that January-February 2010 import volume for natural rubber in Tianjin Port was 9,800 tons, down 13.2 percent from the same period last year.

Analysts said that the decline of rubber imports was led by a drop in tire exports.

(chinadaily.com.cn)

Rubber Nears 18-Month High on Weak Yen, Economic Recovery

April 1 (Bloomberg) -- Rubber advanced for the first time in three days as a drop in the Japanese currency raised the appeal of yen-based contracts, and data from Japan and China boosted investor confidence in economic recovery.

Futures in Tokyo gained as much as 1.7 percent, nearing an 18-month high of 314 yen per kilogram ($3,363 a metric ton) reached on March 30. The price extended a 12 percent rally in the three months ended yesterday, the fifth quarterly gain.

The yen declined to a two-month low against the dollar as signs Asian economies are picking up damped demand for the Japanese currency as a refuge. Confidence among Japan’s largest manufacturers rose for a fourth straight quarter as a rebound in the global economy drove demand for exports.

“A weak yen gave the largest support to rubber futures,” Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo, said today by phone.

Rubber for September delivery gained as much as 5.2 yen to 313.5 yen before trading at 311.7 yen on the Tokyo Commodity Exchange at 11:04 a.m. local time.

Investor appetite for risk assets increased as data showed today that confidence improved among Japan’s industrial companies, Shigemoto said.

China Manufacturing

Manufacturing in China, the world’s largest rubber consumer, expanded at a faster pace in March, reinforcing an economic rebound in the wake of a record expansion of credit that now risks bubbles in the country’s asset markets.

Futures also gained as supply in Thailand, the world’s largest producer of natural rubber, declined seasonally, Shigemoto said. The nation is in the low-output season, known as wintering, which runs from February through April. During this season, trees shed their leaves and latex output slows.

Thai shippers offered so-called RSS-3 grade rubber for May shipment at $3.49 a kilogram today, compared with $3.50 on March 30, he said.

Rubber for September delivery lost 0.4 percent to 24,650 yuan ($3,611) a ton on the Shanghai Futures Exchange at 10:11 a.m. local time. The price retreated after reaching the highest level in almost a month on March 29.

(businessweek.com)

Rubber price breaks 58-year record

The price of natural rubber, the commodity used in products ranging from tyres to condoms, hit an all-time high above $3.50 per kilogramme on Wednesday after a severe drought in Thailand, the world’s largest producer, curtailed supplies.

The increase has broken one of the longest standing price records in commodities, dating back to 1952, when fears about the potential spread of the Korean War to key south-east Asian rubber-producing countries triggered panic buying.

The benchmark rubber ribbed smoked sheet 3, or RSS3, was quoted on Wednesday at $3.52 per kg in the physical market, according to data from the Rubber Research Institute of Thailand, surpassing the $3.50 per kg peak set almost 60 years ago.

The price increase – about 75 per cent over the past year – is likely to lift costs for manufacturers heavily dependant on the commodity, particularly tyres. In the past, most companies have passed the cost increase on to their consumers.

“The present market is tough for raw material purchasing managers,” said Jom Jacob, a senior economist at the Kuala Lumpur-based Association of Natural Rubber Producing Countries. “We could imagine what would be the response of the rubber market if tyre companies frantically enter the market. Perhaps, they do not want to fuel the prices further,” Mr Jacob added.

The physical market for rubber is more important that the derivatives market, which is based in Tokyo, quoted in yen and mostly attracts interest from Japanese speculators.

At the Tokyo Commodities Exchange, rubber for delivery in September on Wednesday rose to Y311.3 per kg, an 18-month high. The exchange rate between the yen and the US dollar has a big influence on rubber futures.

The price surge comes on the back of the worst drought in north Thailand in a decade, which meteorologists blame on the lingering impact of the El Niño weather phenomenon. Drought has also hit India, the world’s fourth-largest producer.

Meteorologists said the recurring climatic event – caused by a rise in the water temperature in the tropical Pacific – hit its peak in January and has since shown signs of cooling.

But its impact is now being fully felt on rubber plantations. In any case, rubber supplies usually decline during the February-to-April winter season in Thailand.

While supply lags, demand has been stronger than expected in emerging markets. China, the world’s largest rubber consumer, has stepped up buying, with imports in January and February up almost 80 per cent compared with the same period of 2009.

India and Malaysia, two key consumers, are also buying more.

(ft.com)

Natural Rubber Rises, Tire Prices Will Too

The cost of natural rubber is reportedly heading for a new high of $3.4/kg, having more than doubled during the last year (1.5/kg to USD 3.4/kg,RSS3 grade).

The news that already high prices are still on the up, highlighted in a Deutsche Bank reported published today, is expected to cause two further prices increases from tiremakers this year. It is expected to take “four to six” months for the record high prices to have an effect on the tire companies’ profit and loss accounts. 

To put the high prices into context, analysts at Deutsche Bank used three premium manufacturers’ natural rubber purchasing bills as examples. According to them, last year Continental spent approximately 500 million euros (7% of tire sales); Pirelli 340 million euros (8% of tire sales) and Michelin 950 million euros (6% of sales) on natural rubber. 

Therefore, say the analysts, a two-times natural rubber price surge means the tire industry will have to increase selling price by 7%-8% to fully offset this “headwind,” taking a constant dollar rate into account. 

Deutsche Bank’s view is that as only 35% to 50% price increases stick, the industry will have to pass on at least another 5% price increase later to fully offset the latest increase. (Tyres & Accessories)

(tirereview.com)

Thailand ‘Very Satisfied’ as Rubber Climbs to Record

By Supunnabul Suwannakij

March 31 (Bloomberg) -- Thailand, the world’s largest rubber exporter, is “very satisfied” with prices that have surged to a record in local-currency terms on strong overseas demand and limited supply, a deputy minister said.

“Prices have risen on their fundamentals,” Supachai Phosu at the ministry of agriculture and cooperatives said in a phone interview today, without giving a forecast. “The government doesn’t need to build up inventory and will leave it to exporters to manage their stockpiles,” Supachai said.

Rubber priced in baht reached an all-time high this week, while the yen-denominated contract in Tokyo has surged to the highest level since 2008, buoyed by increased demand as the global economy moves out of recession. Drier-than-usual weather in southern Thailand, which has coincided with the annual low- output season, has also spurred the rally.

The government’s view will “continue to support domestic prices to rise further,” Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co., said from Bangkok.

Rubber on the Tokyo Commodity Exchange has risen 12 percent this year, touching 314 yen a kilogram yesterday, the highest price since September 2008. The September-delivery contract settled today at 308.3 yen ($3,310 a metric ton).

State Fund

“The government is very satisfied with rubber prices,” Supachai said from Bangkok. An 8 billion baht ($247 million) state fund that may be used to shore up local prices by buying latex from farmers “will be used when prices fall,” he said.

The May-delivery contract on Thailand’s Agricultural Futures Exchange rose to 114 baht a kilogram, the highest price since the bourse was set up in 2004, according to a statement yesterday. The auctioned price of ribbed smoked sheet 3 was a record 112 baht a kilogram today, according to Bloomberg data from the Rubber Research Institute of Thailand

The agriculture ministry has asked the state-owned Rubber Estate Organization, which promotes output and exports, to stop building up inventories, said Supachai. The body holds about 500 tons, he said. That’s less than 1 percent of forecast output.

Production this year may total 3.1 million tons, with exports of about 2.85 million tons, said Supachai. The figures are right in line with Jan. 13 forecasts from the nation’s Office of Agricultural Economics.

(businessweek.com)

Have hiked tyre prices by 7-8%: Balkrishna Industries

In an interview with CNBC-TV18, BK Bansal, CFO, Balkrishna Industries, spoke about the latest happenings in his company and sector.

Here is a verbatim transcript of the exclusive interview with BK Bansal on CNBC-TV18. Also watch the accompanying video.

Q: The last time we spoke with you, you did say that you booked a cost of Rs 90 per kg on rubber prices on account of which you were able to maintain your margins at 25%. Can you tell us right now on account of rubber prices surging so high what is the cost of rubber to you and have you hiked your tyre prices?

A: Currently the rubber prices are ranging between Rs 150-160 per kg. We have been able to pass it on to our customer to some extent, but of course with some kind of time lag.

Q: How much of a quantum of rise have you undertaken on your tyre prices?

A: We have increased price by 7-8% across the board.

Q: While you could pass on, was the cost of rubber to you much cheape? One understood that you have booked it at a lower price, is it true that this quarter your cost of rubber was Rs 90 per kg?

A: Not this quarter, we have already enjoyed that benefit in the first two quarters when our raw material prices were very much at the lower end and thereafter the prices have continuously risen, so the current rubber is at higher cost.

Q: What about your forex entry, you had loss in one quarter, forex gain in another? How are you likely to end this quarter?

A: As far as forex is concerned, what we are booking in our financial statement is the mark to market losses or gain on various foreign currency liabilities that is appearing in our books of account, otherwise we work on forward contract basis wherein we book forward contract in advance and we book our sales as per forward contract rate. Last year, there was a mark to market losses of around Rs 40 crore so that was on account of various foreign currency liabilities that was appearing in our books of account.

(moneycontrol.com)

Asian physical rubber prices - March 31

BANGKOK, March 31 - Asian physical rubber prices were higher on Wednesday, supported by tight supply and rising futures prices on the Tokyo Commodity Exchange, dealers said.

The benchmark Thai rubber price was offered at a record high of $3.52 per kg, breaking the previous record of $3.50 set this week.

Rubber reached levels around $3.30 per kg 58 years ago at the time of the Korean War. It went above that level in March this year and has continued to move higher as demamd is strong and supply is falling for seasonal reasons. [ID:nSGE62S04G]

For a full report on TOCOM, click on [RUB/T]

PRICES OF ASIAN PHYSICAL PRICES COMPARED WITH MARCH 30

Grade Price Change

Thai RSS3 (May) $3.52 +$0.02

Thai STR20 (May) $3.42 +$0.02

Malaysia SMR20 (May) $3.30 unchanged

Indonesia SIR20 (May) $1.47/lb unchanged

Thai USS3 106 baht/kg +1 baht

Thai 60-percent latex (drums, May) $2,400 unchanged

Thai 60-percent latex (bulk, May) $2,300 unchanged

** NOTE - The prices quoted above are offers collected from traders in Thailand, Indonesia and Malaysia. They are not official prices quoted by state-run rubber agencies in those countries.

(news.alibaba.com)

Tyre makers seek PM’s help to cool rubber prices

Thiruvananthapuram: Worried over natural rubber price jumping to Rs 155 a kg, industry outfit the Automotive Tyre manufacturers Association has sought the intervention of Prime Minister Manmohan Singh to ease natural rubber availability in the country. In a memorandum to Prime Minister, ATMA has sought zero-duty rubber imports and ban on futures trading.

In the note, ATMA chairman Neeraj Kumar said the price rise in natural rubber is likely to fuel inflationary trend in transport sector.

Even during peak natural rubber production season (Oct ’09-Feb ’10), domestic rubber prices remained steep and market reports indicate prices could reach Rs 175-180 per kg in the near future. ATMA has asked for permission for duty free import of at least 200,000 million tonne of natural rubber on a priority basis.

Tyre companies not in a position to import rubber, due to the prevailing inverted duty structure since customs duty on natural rubber imports is 20% whereas the import duty on finished product (tyre) is at 8.6% tariff. However, under the Asia Pacific Trade Agreement basic customs duty on tyres is 10%.

Reiterating, its earlier demand of slashing import duty on natural rubber from 20% to 7.5%, ATMA said China has already taken immediate steps by abolishing the customs duty on compound rubber imports and reduction of duty on rubber imports.

Kumar also argued that future trading in rubber fuels speculation. According to an estimate by the Rubber Board, natural rubber consumption in the current financial year is far in excess of production and the gap will widen in the next fiscal.

(financialexpress.com)

India rubber seen hitting new record peaks

ndian rubber prices are likely to set new record highs this week on firm global markets and a shortfall in production due to a drought-like situation in the biggest growing region, traders and analysts said on Monday.

"Summer is very hot this year and it is hampering tapping process," said V N Viswamohan Prabhu, a spot trader based in Kochi.

The state is the biggest producer of the rubber and currently experiencing drought like situation in many districts, its revenue minister told the state assembly earlier this month.

The key Tokyo rubber futures contract hit an 18-month high on Monday, as firmer oil prices and tight supply underpinned sentiment which turned positive after prices topped major resistance of 300 yen last week.

The benchmark April contract on the National Multi-Commodity Exchange (NMCE) hit a high of Rs 15,935 per 100 kg on Monday, the highest level for near-month contract since futures trade was introduced in 2003.

Spot price of the most traded RSS-4 (ribbed smoked sheet) rubber hit a record high of Rs 15,550 in Kottayam, Kerala, as per data compiled by the Rubber Board. The spot price has risen by nearly ten percent so far in March.

"Despite higher prices tyre markers are still buying. Market may set new high this week," Prabhu said.

Usually rubber supplies shrink in summer season in India. In 2009/10, output in the world's fourth biggest producer is expected to drop 4% to 830,000 tonnes from 864,500 tonnes a year ago.

(moneycontrol.com)

Consumption of oil, gas,metals, grain and ruber rise in India and China

Consumption off oil, gas,metals, grain and rubber rise in India and China. The surge in oil, gas, metals, gold, grain, sugar, rubber prices amidst supply concerns, now the global concerns have shifted to rubber with supply-demand mismatch leading to surge in futures prices. 

Consumption in India, China, Brazil, Japan, US, EU and emerging markets are zooming in recent times due to heavy industrial demand. The farmers in Ivory Coast are abandoning cocoa and turning to rubber production as low yields, caused by diseases and ageing trees, trump benefits from 10-year highs in up-country farmgate prices. Despite these highs, few farmers say they have improved their lot and some agronomists estimate that thousands in the top grower may join the exodus from cocoa to rubber. 

Chinese manufacturers produced 654.64 million tyres between January to December in 2009, up 18 per cent compared with 2008. According to data released by the China National Bureau of Statistics (CNBS), 57.19 million tyres were produced in China in December 2009, up 52 per cent compared with the year before. 

Chinese Customs statistics show that China imported 170,000 tons of natural rubber up 190.3 % in January 2010. Imports of synthetic rubber rose 182.3 per cent to 1,271,290 tons. Indian government’s chief economic adviser, Kaushik Basu said economic growth was expected to rise to 8.5 per cent. 

To achieve 7.2 per cent growth for 2009-10, as estimated by the Central Statistical Organisation, the economy must grow over 8 per cent during the fourth quarter. 

Government data showed the food price index rose an annual 16.22 per cent in the week-ended March 13, lower than the previous week's annual reading of 16.30 per cent.The fuel price index rose 12.68 per cent in the year to March 13, flat on the week. The Government had raised motor fuel prices in late February. 

India's crude oil imports jumped up 13.2 per cent in February even though domestic fuel demand dropped marginally, according to data released by the Oil Ministry. Domestic fuel sales at 11.39 million tonnes in February were 0.2 per cent lower than 11.41 million tonnes of petroleum products consumption in the same month a year ago. 

The worst drought in a century has been ravaging China's southwest provinces of Yunnan and Guizhou and the region of Guangxi, leaving 20.5 million residents and 12.6 million heads of livestock with insufficient drinking water. 

The drought centres on China's major sugar and rubber areas and could have a big impact on output, forcing the country -- already a major rubber importer -- to source more from overseas. A reduction of sugar output will expand domestic shortages and require more imports later in the year 

Another factor which is weighing on the metal prices is the concern of Chinese government raising interest rates. 

It is expected that China may very soon increase interest rates to control inflation which may slow down growth in the world’s fastest growing economy. There is a belief that the ministers in the Euro-zone are agreeing to help Greece partly through IMF. This may help the base metal prices as investor sentiment may get a boost. Investors will continue using oil, gold, metals as a hedge to protect against risk, sovereign debt issues and inflation. in the long term oil, gas, gold, metal prices will rise due to trillions of dollars of stimulus money injected into the world economy. 

The weaker dollar has been a key factor behind the recovery in oil, gold and metal prices. Metal inventories have meanwhile continued to come under pressure. Declining inventory, in a month which traditionally sees stocks build, has been one of the factors helping to underpin the oil, gold and metal’s recent price strength. 

Strong growth in China, India, and some other countries will rise demand and prices. Albanian Minerals in New York and her sister company Bytyci ShPK in Tropoje Albania forecast that global growth will move from a decline in 2009 to a astonishing gain in the future. Demand for oil, gold, food, raw materials to pick up in 2010. 

(online.wsj.com)

India rubber seen hitting new record peaks

MUMBAI, March 29 (Reuters) - Indian rubber prices are likely to set new record highs this week on firm global markets and a shortfall in production due to a drought-like situation in the biggest growing region, traders and analysts said on Monday.

"Summer is very hot this year and it is hampering tapping process," said V. N. Viswamohan Prabhu, a spot trader based in Kochi in southern Kerala state.

The state is the biggest producer of the rubber and currently experiencing drought like situation in many districts, its revenue minister told the state assembly earlier this month.

The key Tokyo rubber futures contract hit an 18-month high on Monday, as firmer oil prices and tight supply underpinned sentiment which turned positive after prices topped major resistance of 300 yen last week. See [ID:nTOE62S078]

The benchmark April contract NMRUJ0 on the National Multi-Commodity Exchange (NMCE) hit a high of 15,935 rupees per 100 kg on Monday, the highest level for near-month contract since futures trade was introduced in 2003.

Spot price of the most traded RSS-4 (ribbed smoked sheet) rubber hit a record high of 15,550 rupees in Kottayam, Kerala, as per data compiled by the Rubber Board. The spot price has risen by nearly ten percent so far in March.

"Despite higher prices tyre markers are still buying. Market may set new high this week," Prabhu said.

Usually rubber supplies shrink in summer season in India. In 2009/10, output in the world's fourth biggest producer is expected to drop 4 percent to 830,000 tonnes from 864,500 tonnes a year ago. 

(in.reuters.com)

Prices may inch higher by 15% next quarter: Apollo Tyres

Rubber prices are at fresh 18 month highs as prices last week hit Rs 150 per kg. Most tyre makers have hiked prices by 2-6% in March. Further price hikes are likely in April. Rubber prices account for 45% of total raw material cost.

Prices of rubber have notched up 70% in the last six months. Crude derivatives have seen a surge in prices in recent months and are up 15% since the second quarter of FY10. Meanwhile, tyre makers maintain that a price of Rs 85 per kg price will not be too harsh on them to hold margins.

In an interview with CNBC-TV18, Neeraj Kanwar, VC & MD, Apollo Tyres, gave his outlook on rubber prices and the road ahead for tyre manufacturers.

Q: When would you undertake another price hike and what would the quantum be?

A: The prices of natural rubber are again today at an all time high of around Rs 165 per kilo. Even internationally rubber has gone up to around USD 3,500 per metric tonne. We have taken some price corrections in the month of January and February including in March where we have taken a price increase of around 7.5%.

But given the pressure that we have on natural rubber, especially as you know 60% of our raw material is because of natural rubber, it would mean that as an industry we need to take price increases of higher than 15% over the next 2-3 months. We are taking it up with the government because this is hurting the industry. Prices are higher today from last year. It was at an average of about Rs 70 a kg which today is at Rs 165 per kg. So there has been an increase of as high as Rs 90-100 per kg.

Q: So you have undertaken a price hike of 7.5% already and you plan to up that further in the next couple of months?

A: Yes we would have to because our margins are under pressure and given the way we see natural rubber increasing we would need to take these price hikes.

Q: You did mention earlier that margins are not going to be sustainable at that 15.5% level that you showcased in Q3. How much pressure are you expecting in the next couple of quarters on your margins and what would the figure stabilize at?

A; I can't quantify that. We believe we can do better margins. But today given the pressures on natural rubber, as I mentioned to you in Q3, the margins are under pressure and I can't quantify that.

But at the same time there is a huge increase in demand and we have seen that in the automotive sector. So in order to really give a boost to the tyre industry we need the correction in natural rubber prices. Otherwise as an industry we are getting hurt in this aspect.

Q: On the export front when I spoke with you last, you said that you are seeing a good bit of traction in many of the geographies, can you tell us what kind of expectations do you have going into the next quarter?

A: Export business is at around 10-11%, we are not seeing a major increase happening there but yes as far as passenger radials are concerned there is a huge demand coming in exports market also but today domestic demand is so bullish that whatever the Indian tyre industry is producing we are looking at the consumption and the domestic level.

But again our main issue that remains on board is the natural rubber prices. What happens is that an increase in Re 1 per kg is translating into an additional financial burden of nearly Rs 60 crore to the tyre industry. This is something which is really hurting us.

Q: Do you think that this entire 15% that you are expecting on the tyre prices will be digested by the market because we do understand that OEMs have given a go ahead for a hike in the prices but to such a large quantum don’t you think that is a little concern?

A: Yes that is a major concern and that is why as chairman of ATMA I have written to the Prime Minister and to the government and basically we need a correction here because what is happening is that there is a huge protection for the natural rubber growers and we are not being able to import natural rubber with duty free imports.

Today we have an inverted duty structure where natural rubber is at 20% customs duty and our finished goods is at 7-8.5%. We have been taking it up with the government but we have not been getting any respite even after taking up the matter with various government bodies and the Centre.

So we have written to the PM hoping to see that there is some correction for natural rubber. We have also voiced our opinion, and maybe in the past the government has on their own imported natural rubber to the tune of 100,000 metric tonnes. We have requested them to see that they are able to import 200,000 metric tonnes of natural rubber thereby giving some respite to the tyre industry. I hope this has a positive impact from the government.

(moneycontrol.com)

Rubber Rises to 18-Month High as Thai Supply Drops, Oil Climbs

By Aya Takada

March 29 (Bloomberg) -- Rubber advanced to the highest level since September 2008 as supply in Thailand, the world’s largest exporter, declined and an increase in oil prices boosted the cost of making rival synthetic products used in tires.

Futures in Tokyo rose as high as 312.3 yen per kilogram ($3,373 a metric ton) after last week rallying 5.9 percent. The price has advanced 13 percent this year.

Shippers in Thailand raised the price of natural rubber for overseas buyers by 3 percent to reflect declining supply, said Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo. Thailand is in the annual low-output season, known as wintering, which runs from February to April.

“Investors bought rubber futures as they were undervalued when compared with physical prices,” Shigemoto said by phone today.

Rubber for September delivery, the most-active contract, gained 1.9 percent to settle at 312 yen on the Tokyo Commodity Exchange.

Thai shippers raised offers for so-called RSS-3 grade rubber for May shipment to $3.40 a kilogram from $3.30 on March 25, Shigemoto said. During wintering rubber trees shed their leaves and latex production slows.

Futures also increased as higher oil prices raised the appeal of natural rubber as an alternative to synthetic products made from petroleum, he said.

Oil Climbs

Crude oil climbed from a two-week low on speculation that the economic recovery will boost fuel demand, and as receding concerns over Greece’s debt crisis bolstered the euro against the dollar.

The May-delivery contract rose 0.8 percent to $80.61 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 3:39 p.m. Tokyo time.

Rubber for September delivery rose as much as 1.6 percent to 25,185 yuan ($3,689) a ton on the Shanghai Futures Exchange, the highest level since March 1. It traded at 25,050 yuan at 2:45 p.m. local time.

Natural rubber inventories monitored by the Shanghai bourse plunged 24,663 tons to 74,220 tons, based on a survey of 10 warehouses, the exchange said March 26. That was the lowest level since August 2009.

(businessweek.com)

Genencor and Goodyear create tires from BioIsoprene

Genencor and Goodyear have teamed up to create, if not a better tire, at least one as good.  These tires will actually be better because they are made with less petroleum.  Genencor has created a tire for Goodyear made out of BioIsoprene, a material created from renewable resources.

Back in 2008, Goodyear and Genencor, a division of Danisco, began collaborating on creating tires from a renewable resource rather than petroleum.  Goodyear and Genencor turned to BioIsoprene as a way of fulfilling their goal to create tires from renewable resources.

“As a company, we lead the industry with forward-looking tire technologies that contribute to greater road safety and reduce the impact on the environment,” said Arthur de Bok, president of Goodyear Dunlop Tires Europe.

Goodyear received the “Environmental Achievement of the Year” by the Tire Technology International Awards for Innovation and Excellence for its new BioIsoprene tire.  BioIsoprene is derived from “renewable raw materials” and can be used in place of petroleum based Isoprene.  Isoprene and now BioIsoprene are used to create synthetic rubber for tires.  According to The American Chemical Society manufacturing tires requires seven gallons of petroleum per tire.  Using BioIsoprene will reduce that down if not to zero then close to zero.

The process can use sugars derived from sugar cane, corn, corn cobs, switchgrass or other biomass to produce the ingredient, a biochemical called isoprene, derived from renewable raw materials.

The BioIsoprene tire was on display at the Copenhagen International Airport during the United Nations Climate Change Conference in Copenhagen (COP 15).  It was also displayed at the Geneva Motor Show in early March.

Besides tires, Genencor expects BioIsoprene to be used in other rubber based products like surgical gloves and adhesives.  The potential market for BioIsoprene could reach “11 billion pounds [over 16 billion dollars] per year by 2012”.  Replacing petroleum based Isoprene with BioIsoprene will allow manufacturers of rubber based products like Goodyear to switch to a sustainable material and process for its future tires.

Creating products made with sustainable renewable resources only makes sense.  Whenever you think that peak oil is or may be reached, creating solutions like BioIsoprene for that inevitability will ensure a seamless transition into a petroleum-free world.

(green.blorge.com)

Sugar-rubber tyre inches closer to the road

15:00 29 March 2010 by MacGregor Campbell

Even the most clapped-out jalopy could get a green upgrade thanks to a process that can turn plants into synthetic rubber for tyres – usually, the stuff is made from petroleum.

Isoprene is a synthetic version of natural rubber that is used primarily in tyres: it makes up as much as 27 per cent of new tyres, says Ilana Aldor, a chemist at Genencor, a company based in Silicon Valley. Because supplies of natural rubber cannot meet our demand for tyres, most isoprene is collected as a by-product of petroleum refining – and those supplies are under threat, says Aldor, because refining is getting better.

Now Genencor, working with tyre giant Goodyear, has found an alternative source. "We are successfully producing large amounts of bio-isoprene," says Aldor. Some has even been made into tyres to demonstrate the concept.

Engineered organisms

Aldor and colleagues took gene sequences for an enzyme that allows vines and trees like kudzu and poplar to synthesise isoprene, and inserted them into strains of the bacterium Escherichia coli and a fungus. The genetically engineered micro-organisms were able to feed on plant products such as glucose, sucrose, glycerol or plant oils to produce isoprene gas, which was then collected, condensed and purified.

Different combinations of micro-organism strain and feedstock are being tried to find the best yield. So far the set-up has produced 60 grams of isoprene gas per litre of feedstock broth in under 40 hours, says Aldor.

Proof of concept

Her colleague Joseph McAuliffe told New Scientist that although the technology won't be hitting the road for several years, there seems to be no reason why it can't be used to make tyres commercially.

"I think it's definitely feasible," says Adam Meadows, a chemist at green chemistry firm Amyris, based in Emeryville, California, who works on similar biochemical methods for making diesel from plant feedstocks. "They've demonstrated a nice proof-of-concept."

Although the production of bio-isoprene may be more sustainable than that of the petroleum-based version, bio-isoprene isn't free of environmental problems: neither compound is biodegradable.

(newscientist.com)

Tyre-makers seek ban on rubber futures

Press Trust of India, March 29, 2010 (New Delhi)

Hit by the steep rise in natural rubber prices, the Automotive Tyre Manufacturers Association has urged Prime Minister Manmohan Singh to ban futures trading of the commodity and allow duty-free import of at least 2,00,000 tonne of the raw material.

The industry body in a letter to the Prime Minister, also urged either reduction in import duty on natural rubber to 7.5 per cent from existing 20 per cent or doubling of customs duty on imported tyre to 20 per cent to help domestic manufacturers.

"Rubber growers are hoarding and trading more and more in speculation, and thereby increasing prices. There is also a big demand-supply gap," ATMA chairman Neeraj Kanwar said.

In his letter to Singh on March 26, Kanwar urged the PM to ban futures trading till "volatility in natural rubber prices is contained and availability situation improves". He said domestic tyre firms are having a tough time and their margins are under pressure due to rise in rubber prices.

Prices have surged by over 60 per cent in the last seven months and hovering around Rs 155 a kg at present, which was more than double the average price in March, 2009. Market reports hint that the prices may rise further to Rs 175-180 a kg in the near future.

"Along with the rising rubber prices, availability is also a matter of serious concern, and so tyre manufacturers should be allowed duty-free import of at least 2,00,000 tonne on a priority basis," he said.

In his letter, Kanwar said, "price increase of Re 1 translates into an additional financial burden of Rs 60 crore for tyre industry."

Stating that tyre manufacturers will have to pass on the additional burden to consumers in coming days, he said, "the industry would want to increase tyre prices by 20-25 per cent immediately," Kanwar said, and recalled that there was a 5 per cent hike in January, followed by 2 per cent in February.

"Another round of hike of 2 per cent will happen in April," Kanwar informed.

With cheap imports from China hurting domestic firms, the association wants to see import duty on tyres increased to 20 per cent from the present 10 per cent.

"China has already taken immediate and effective steps by abolishing customs duty on compound rubber imports and reduction in duty on natural rubber imports, thereby helping its tyre and rubber goods manufacturing industry maintain competitiveness," the letter said.

Meanwhile, the demand for tyres from the vehicle makers are gradually increasing as the domestic market has rebounded with record sales. Kanwar said under the prevailing circumstances, the tyre-makers would find it difficult to meet the demand of the booming auto industry.

(beta.profit.ndtv.com)

Rubber Smallholders Must Use Special Card To Sell Rubber

BENTONG, March 27 (Bernama) -- Rubber plantation smallholders must use the Smallholders Sales Registration Card to sell their produce beginning next month.

Plantations Industries and Commodities Minister Tan Sri Bernard Dompok said the card, which was issued free, was to overcome frequent theft of rubber.

"With the card, the Malaysian Rubber Board (LGM) will know who sells and if the source was valid," he told reporters after a visit to the rubber purchase premises of Mohd Raffi Mat Arif in Kampung Lebu near here Saturday.

Also present was LGM director-general, Dr Salmiah Ahmad.

Dompok said rubber traders were only allowed to buy rubber from card holders and enforcement, including suspension of licences, would be carried out on traders who bought stolen rubber or from individuals who did not have the card.

He said the card will be officially launched next month before the programme was introduced to smallholders for registration and for the providing of information.

Dompok however said that about 4,000 cards had been distributed to smallholders in a pioneer programme last year.

"There has been a drop in rubber theft since the card was introduced," he said.

Dompok said smallholders who hired foreign workers needed to have information of their workers for purposes of monitoring.

(bernama.com)

Rise in spot rubber prices

On Friday (26 March 2010), the spot rubber prices rose as sharp gains in the international futures catalyzed the domestic mood and it made all-round gains mainly on speculative buying and short covering. Sheet rubber rose to Rs 154.50 from Rs 153.50 per kg with comparatively dull volumes.

The April futures for RSS 4 rose to Rs 158.25 (156.96), May to Rs 160.90 (159.12), June to Rs 160.60 (158.62) and July to Rs 160 (158.63) per kg on National Multi Commodity Exchange.

Spot prices (Rs/kg) were: RSS-4: 154.50 (153.50); RSS-5: 153.50 (152.50); ungraded: 151.50 (151); ISNR 20: 151.50 (151) and latex 60%: 100 (100).

(bloombergutv.com)

Indian diamond market to touch Rs 1L cr in 5 years

SURAT (Commodity Online): India’s diamond market is poised to make big strides in the coming days and according to experts it will post a 20 per cent growth.

Analysts said demand for diamond jewellery is improving world-wide and people in India are buying more diamonds these days as it is a good mode of investment. The Indian diamond market is likely to grow at 20 per cent to touch Rs 1-lakh-crore in the next five years whereas gold will grow at 8-10 per cent year- on-year.

At present, the domestic diamond market is pegged at Rs 12,000 crore and the total jewellery market in the country is worth Rs 70,000 crore.

Meanwhile, the Antwerp World Diamond Centre (AWDC) hosted the latest edition of its popular workshop and networking event “Antwerp Diamond Day” at the Leela Kempinski hotel in Mumbai on March 25th 2010. The event was a part of the economic trade mission led by Prince Philippe of Belgium to India and aimed to introduce the most important players in the Indian diamond trade to their counterparts from Belgium.

During his welcome speech, AWDC CEO Freddy J Hanard said, “There is no better way to do business than face-to-face and that is why we organise these diamond days. It is a unique chance for you to meet with the key players of the Indian and Antwerp diamond industry. We had already done Antwerp diamond days in Singapore, shanghai, Jakarta, South Africa and Botswana. We are proud that Mumbai with the Antwerp representatives and more than 100 companies is added to that list.” He further cited the long bi-lateral relationship between India and Belgium diamond industries and emphasised on understanding the importance of the Indian market. Around 80 percent in terms of carat and 65 percent in value terms of rough traded in Antwerp find their way to India. He also stressed on the need to change in current economic scenario “We have to reinvent ourselves and look at what our challenges in the future are. It is only then we can acquire businesses, market share or protect what we have,” he said.

The Gem and Jewellery Export Promotion Council (GJEPC) Chairman Vasant Mehta said, “Merchandise exports from India to Belgium rose from 3.47 billion dollars in 2006-07 to 4.48 billion in 2008-09. Of this diamond industry contributed USD 1.59 billion in 2006-07 and USD 1.56 billion in 2008-09. While gems and jewellery accounts to 35 percent of India’s overall exports to Belgium, diamond imports from Belgium have a 66 percent share from the overall exports of Belgium. It would not be an exaggeration to say that diamond industry is one of the crucial cobblestones of Indo-Belgium trade ties.”

(commodityonline.com)

Rubber Board to launch tappers’ banks

First Published : 27 Mar 2010 10:12:04 AM IST

KOTTAYAM: In an innovative and futuristic move, the Rubber Board has decided to organise rubber tappers’ banks, under the auspices of Rubber Producers’ Societies.

The objectives of the initiative are to find a solution to the scarcity of tappers and to improve their standard of living, thereby creating a win-win situation for both growers and workers.

Rubber Board chairman Sajen Peter will inaugurate the first tappers' bank at Poothrukka RPS near Kolenchery in Ernakulam district on March 29, stated a press note.

Rubber Board vice-chairman Siby J Monippally will preside over the function.

Tappers’ banks are self help groups of 20-30 trained rubber tappers, envisaged to work under the umbrella of Rubber Producers’ Societies.

Once the project is launched, farmers will get the service of skilled tappers on payment of a fee, and the tappers' bank would ensure attractive remunerations and job security to the member tappers.

The bank will also pay incentives to the tappers for the additional produce realised by them through tapping, under the head of `over-poundage'.

The member tappers will also get additional financial benefits like insurance coverage, savings under the Group Life Insurance-cum-Terminal Benefit scheme of the Rubber Board and benefits under the Public Provident Fund Scheme.

Those enlisted can also enrol in the Personal Accident Insurance Scheme under the Price Security Fund Trust of the Government of India.

In addition, the board will provide uniforms and monthly allowance for maintaining the tapping implements.

(expressbuzz.com)

Rubber, Crude and Tyre stocks: All set on sail

By Rutam Vora

The recent uproar over a sustained rise in rubber prices, which is said to have started hampering profits of the tyre manufacturers, has drawn attention of rubber consumers across the world. However, it is evident from the stock price movement of the rubber users, mainly the tyre makers, that the gain in the stock valuations over past one year have appreciated heavily on the bourses, becoming a favourite pick for the investors. 

History of rubber prices 

Historically, rubber prices have maintained a sluggish pace during 1998 to 2002 with prices being range-bound between Rs.2000 per quintal to Rs.4000 per quintal. Similar was the case with crude prices that had maintained a steady pace till April 2004 with prices hovering around USD 30-40 per barrel. But in the later period, rubber prices outperformed crude prices, with prices shooting up more rapidly than crude till October 2008, after which a steep correction was witnessed in both the commodities. 

According to the data, in 2009, Thailand lead the global rubber production with 39% share of total production at 3036 thousand tonnes, while Indonesia ranked second with 2595 thousand tonnes, constituting about 29%. Malaysia and India contributed almost equally with 856 thousand tonnes and 820 thousand tonnes respectively. 

Rubber prices have shown upbeat trend especially following the crude prices. Rubber prices can be matched with the rising crude prices as synthetic rubber making consumes crude oil as its key ingredient. However, over past one year, crude as well as rubber prices have remained upbeat. Considering the global shortfall in the crop with major cultivation area in south-west Asia is witnessing about 3% production shortfall, the prices are feared to head northwards. Experts opined that the global demand-supply situation for rubber is very tight that even a small mismatch on either side could create huge impact on the prices world over. 

Rubber-crude oil co-relation 

Since the bulk of the rubber produced is the synthetic variety, which is derived from petroleum. Up to some extent, prices of even natural rubber are determined to a very large extent by the prevailing global price of crude oil. Figures suggest that there is a 91% correlation between rubber and oil prices from April 1998 to the recent period. Rubber prices have surged from around Rs.2000 per quintal in April 1998 to Rs.14,000 per quintal in October 2009, while crude prices have shot up from around USD 20 per barrel to USD 80 per barrel by October 2009. This shows astounding relativity between the global economic indicator and rubber prices. 

Tyre makers and stock movement 

Tyre makers constitute about 60-70% of the total rubber consumption in India, while rest of which goes to various non-tyre applications including making of medical gloves, slippers, latex etc. 

However, a recent splurge in rubber prices does not seem to have hampered stock price movement of the tyre makers, which has continued uptrend despite steep rise in the key input material. India’s one of the largest tyre maker, MRF Ltd (BOM:500290) has gained about 311% in past one year on the Bombay Stock Exchange (BSE). The company’s market capitalization has jumped to Rs.29.49 billion as on March 26, 2010.

Another tyre manufacturer, Appolo Tyres Ltd (BOM:500977) yielded equally heavy return of about 312% on stocks valuations over past one month. The company’s market capitalization, as on March 26, 2010 stood at Rs.37.10 billion. Goodyear India Ltd (BOM:500168) has surged over 200% during the given period. Meanwhile, JK Tyre & Industries Ltd (BOM:530007) posted the maximum gains of over 400% in past one year. 

Considering the robust stock price appreciation of the tyre makers, the rubber prices do not seem to be hampering the stock movement on the bourses. However, the steadily rising rubber prices have made a dent in the pocket of the actual consumers, but investors of tyre stocks have no cause of worry as they are cashing on the dual opportunity of price rise in crude oil and appreciation of rubber stocks.

Vora is Special Correspondent with Commodity Online News Service

(commodityonline.com)

Commodity Trends:Rubber prices to be in focus

Commodity Online 

After the surge in sugar prices amidst supply concerns, now the global concerns have shifted to rubber with supply-demand mismatch leading to surge in futures prices. Consumption in India, China and emerging markets are zooming in recent times due to heavy industrial demand.Many farmers in Ivory Coast are abandoning cocoa and turning to rubber production as low yields, caused by diseases and ageing trees, trump benefits from 10-year highs in up-country farmgate prices. Despite these highs, few farmers say they have improved their lot and some agronomists estimate that thousands in the top grower may join the exodus from cocoa to rubber. 

Exporters say prices have ranged from 900 CFA francs ($1.83) per kg to 1,000 francs per kg since October, at the opening of the marketing season to early March. 

Chinese manufacturers produced 654.64 million tyres between January to December in 2009, up 18 per cent compared with 2008. According to data released by the China National Bureau of Statistics (CNBS), 57.19 million tyres were produced in China in December 2009, up 52 per cent compared with the year before. In addition CNBS said synthetic rubber production rose 8.7 per cent to 2.76 million tons during 2009. In December, synthetic rubber output rose 15 per cent compared with the same period last year, reaching 268 thousand tons. 

Furthermore, Chinese Rubber Industry Association, CURC, reported that Chinese Customs statistics show that China imported 170,000 tons of natural rubber (up 190.3 per cent) in January 2010. Imports of synthetic rubber rose 182.3 per cent to 1,271,290 tons. According to the figures, the price of raw materials rose sharply in the international market, especially natural rubber and synthetic rubber, where prices rose 3.95 times and 1.95 times respectively 

POINTERS 

India’s GDP to be 8.5% :The government’s chief economic adviser, Kaushik Basu said economic growth was expected to rise to 8.5 per cent in the fourth quarter, while inflation was likely to be lower from May-end. “In the third quarter, economy did not do well as agriculture shocks were concentrated… in the fourth quarter, we expect a growth of 8.5 per cent,” Basu said. 

The economy grew 6 per cent in the October-December period, after expanding a stunning 7.9 per cent in the second quarter and 6.1 per cent in the first quarter. 

To achieve 7.2 per cent growth for 2009-10, as estimated by the Central Statistical Organisation, the economy must grow over 8 per cent during the fourth quarter. 

India’s Inflation eases to 16.22% : Inflation eased for the third straight week in mid-March even as fuel inflation remained steady. Government data showed the food price index rose an annual 16.22 per cent in the week-ended March 13, lower than the previous week's annual reading of 16.30 per cent.The fuel price index rose 12.68 per cent in the year to March 13, flat on the week. The Government had raised motor fuel prices in late February. 

US stocks ease on Greek debt rescue, Japan’s Nikkei up: Japan's Nikkei average climbed 1.6 percent to its highest close in 18 months on Friday as recent weakness in the yen buoyed exporters, and helped by investors looking to secure dividends before the financial year end.Tokyo shares have gotten off to a solid start in the first quarter after lagging overseas indexes last year. 

However, a rally on U.S. markets collided with a rescue plan for Greece Thursday that shifted currency values and pulled the rug out from under U.S. commodities. France and German reportedly reached an accord on helping Greece, perhaps welcome news, but a development that turned a Dow Jones industrial average gain of more than 100 points to a near breakeven 5.06 point gain.By close, the DJIA was up 0.05 percent at 10,841.21 points. The Standard & Poor's 500 index closed down, off 0.17 percent, 1.99 points, to 1,165.73. The Nasdaq composite index lost 0.06 percent, 1.35 points, to 2,397.41. 

On the New York Stock Exchange, 1,256 shares advanced and 1,779 declined on a volume of 5.6 billion shares traded. The benchmark 10-year U.S. Treasury note lost 9/32 to yield 3.884 percent. The euro fell to $1.3284 from Wednesday's $1.3325. Against the yen, the dollar rose to 92.70 yen from Wednesday's 92.16 yen. In Japan, the Nikkei 225 index added 13.82 points, 0.13 percent, to 10,828.85. In Britain, the FTSE 100 index gained 49.77 points, 0.88 percent, to 5,727.65 

India crude oil imports rise 13.2% :India's crude oil imports jumped up 13.2 per cent in February even though domestic fuel demand dropped marginally, according to data released by the Oil Ministry. Domestic fuel sales at 11.39 million tonnes in February were 0.2 per cent lower than 11.41 million tonnes of petroleum products consumption in the same month a year ago. 

Indian Rupee touches 18 month high: The rupee on Friday touched an 18-month high against the dollar, as the US currency came under selling pressure in both local and international markets.The rupee ended the day at 45.24, the level last seen in September 2008. Dealers said the dollar's weakness against other major currencies, selling of greenback by corporates and capital inflows into the country helped the rupee gain. 

Drought in China: The worst drought in a century has been ravaging China's southwest provinces of Yunnan and Guizhou and the region of Guangxi, leaving 20.5 million residents and 12.6 million heads of livestock with insufficient drinking water. 

The drought centres on China's major sugar and rubber areas and could have a big impact on output, forcing the country -- already a major rubber importer -- to source more from overseas. A reduction of sugar output will expand domestic shortages and require more imports later in the year 

Bullion

Spot Gold prices declined in the last week as the dollar gained, reducing the appeal of the yellow metal as an alternative safe-haven investment. The dollar index which measures its performance against six other major currencies of the world touched a high of 82.24 on March 25, 2010 the highest level in last 10 months. The debt crisis in the Greece led the dollar to strengthen as a safe-haven investment. The ailing country is facing debt redemptions of around 20 billion Euros in the next two months. However, the gold prices wiped out earlier losses towards the end of the week as expectations of a solution to Greece’s issue from the EU summit at Brussels supported prices. 

Slight recovery in risk sentiments in the financial markets also stalled the sharp rally in the dollar and helped the yellow metal prices to rebound. In the coming week, the US dollar could come under pressure as a rise in risk appetite will affect demand for the low-yielding dollar. This may help the gold prices to wipe out earlier losses as the yellow metal usually trades inversely to the greenback. Spot gold have a strong support at 1084/1065 levels and Resistance at 1120/1135 levels. MCX April Gold has a strong support at 16100/15960 levels and resistance at 16515/16750 levels. 

Base Metals

The base metals pack suffered last week on the LME as the strength in the dollar weighed on the prices. Mixed sentiments in the financial markets in the earlier sessions of the week also exerted pressure on the metal prices. The dollar was on a continuous gain last week on the back of increasing concerns in the Euro-zone. There are fears that the problems may spread to the neighboring countries including Spain, Portugal and Italy. Economic data from the US last week was mixed as the new home sales declined unexpectedly. But, durable goods orders increased in the world’s largest economy in the last month. Moreover unemployment claims decreased by 14,000 which also helped in improving the investor sentiment. Another factor which is weighing on the metal prices is the concern of Chinese government raising interest rates. 

It is expected that China may very soon increase interest rates to control inflation which may slow down growth in the world’s fastest growing economy. There is a belief that the ministers in the Euro-zone are agreeing to help Greece partly through IMF. This may help the base metal prices as investor sentiment may get a boost. In the coming week, copper prices may bounce back as the safe-haven buying in the dollar could reduce and make metals look attractive for holders of other currencies. MCX April Copper shall find a strong support at 332/328 levels and resistance at 345/350 levels for the coming week. 

Energy

Crude Oil prices ended in the red last week as fundamentals like rising inventories and strength in the dollar weighed on the commodity. Recovery in risk sentiments failed to provide upside to oil as markets remain susceptible over demand. Sudden surge in inventories of crude oil by 7.25 million barrels last week in the US, has led to a concern over the demand in the world’s largest consumer. Constant increase in inventories is denting the short-term outlook. 

The US Energy department reported that crude oil inventories increased by 7.25 million barrels in the previous week, denting the outlook for crude oil. In the coming week, we expect oil prices to trade lower as concerns over rising inventories will dominate market sentiments. However, sharp downside will be protected if the dollar weakens on the back of risk appetite in the financial markets. MCX April Contract shall find a strong support at 3645/3620 levels and resistance at 3720/3750 levels for the coming week. 

Soybean

Soybean (NCDEX April contract) futures improved slightly on short covering and fresh buying at lower levels in the second consecutive week after continuous fall during the last 4 months. The April contract recorded weekly low and high of Rs 1997.50 & 2060.00 a quintals respectively. Lower imports of edible oil in the month of February also favoured to bulls. As per Solvent Extractors’ Association of India, the import of vegetable oils in the month of February 2010 was at 6.71 lakh tonnes, down 8 % as compared to 7.30 lakh tonnes in February 2009. Prices fell continuously in the last 4 months on account of poor export demand of soy meal and higher global output estimates this year as compared to last year. 

As per the Solvent Extractors' Association, India's oil-meal exports in the first 11 months of the fiscal year (April 2009 – February 2010) declined to 30 lakh tonnes from 50.83 lakh tonnes during the same period last year (down by 41%). As per Central Organisation for Oil Industry and Trade (COOIT), Domestic Rabi oilseed output estimates increased to 94.60 lakh tonnes this year, up 2.50 % from 92.30 lakh tonnes in 2008-09. According to USDA report, World oilseeds production estimates for 2009-10 increased to 435.30 against 395.57 million tonnes in 2008-09. In the coming week, Soybean prices are expected to further improve on short covering and thin arrivals may provide support to bulls. NCDEX April contract shall find a strong support at 1990/1960 levels and resistance at 2065/2100 levels for the coming week. 

Black Pepper: 

Black pepper prices over a couple of days have surged in the domestic mandis due to slow arrivals and expected demand from the overseas market. On Thursday, pepper futures short on with all the contracts hitting the second ceiling on strong domestic demand amid limited supply and reports of firmer prices in Vietnam. 

Buying pressure in the primary and terminal markets had also steered the prices of future contracts to hit the ceiling, Vietnam is a major producer of pepper, which has harvested only 30 percent of its pepper produce yet. Another factor, there is market about the lower production of pepper in India also provided support to bulls. India’s production is projected (by trader) at 37,000 tonnes this year as compared to 53,000 tonnes as expected earlier (by spice board). As per traders, that the domestic stockists are buying aggressively in anticipation of higher prices in coming days on account of lower production estimates. 

Towards weekend, selling pressure in Karnataka led to weakenss in pepper futures. April contract on the NCDEX declined by Rs 93 to 15,128 a quintal. May and June dropped by Rs 109 and Rs 90 respectively to Rs 15,393 and Rs 15,600 a quintal. There was a reported selling pressure on Coorg pepper in Karnataka, which was being sold at Rs 14,500 a quintal delivered anywhere in India, and that had also driven down the prices on the futures market. According to an overseas report on Friday, Vietnam pepper prices were up in line with the Indian price trend. Most sellers there preferred to wait for the market to stabilise before offering firm. 

Exclusive and reserved reports now open to public

However, China and West Asia Middle-East continued to buy. Brazil was reportedly regularly trading with South America and Africa. Most sellers in Brazil were said to be preferring to hold on to Asta pepper expecting better prices. 

Prices of different origins in US dollar per tonne (c&f) New York were MG 1Asta – 3,550 – 3,650; Lampong Asta – will respond to firm bids; Vietnam 500 GLfaq - $2,800(fob); Vietnam Asta – 3,400; Brazil 500 GL and 550 GL – 2,850 and 2,900(fob) respectively; Brazil Asta 3,000 (fob); MLSV Asta – 3,500 c&f New York; Vietnam white pepper double washed $4,500 plus and Muntok white pepper $5,000 plus 

NCDEX April Contract shall find a strong support at 14180/13800 levels and resistance at 15800/16100 levels for the coming week. 

Rubber 

India’s spot rubber prices have zoomed to Rs 155 per kg for RSS 4 grade on speculation and short covering amid global concerns of supply and rising demand. Global natural rubber prices continue to remain firm mainly on account of a sharp spurt in demand and heightened imports by China, India and Malaysia, according to market reports. 

Preliminary estimates of import and consumption of rubber in January and February by the Association of Natural Rubber Producing Countries (ANRPC) reveal substantial growth over the previous year.Figures released by the ANRPC show that imports by China surged 63 per cent for natural rubber and 118 per cent for compound rubber in the first two months of this year. And, more than 95 per cent of the imported compound rubber consists of natural rubber. 

In Malaysia, natural rubber import rose 34 per cent. During the same period, India posted a 17 per cent growth in consumption of natural rubber and over 100 per cent growth in imports. The ANRPC also pointed out that large scale capacity addition taking place in the Indian auto tyre industry indicate the possibility of a further acceleration in natural rubber demand. 

TOCOM futures had risen 1.5% last week to $1.46/ kg on storng demand forecasts. August delivery contracts may touch $1.51/kg soon. The bullish trend was strengthened by news that Indonesia output is also set to drop sharply and a weaker yen. 

The Indian tyre industry, the largest consumer of natural rubber, has urged the Centre to allow duty-free import of at least two lakh tonnes of natural rubber on a priority basis, preferably through a Government agency. 

It has also asked for a differential customs duty structure allowing imports at a lower duty – about 7.5 per cent – to facilitate imports during the lean months of natural rubber production. 

A target of 6 percent growth in world supply this year may not be met because of drought in major producing nations, the group, which represents countries accounting for 94 percent of global rubber production, ANRPC said in a newsletter. By weekend, Indian spot prices steadied to Rs 153/kg as there are no major buyers or sellers. NMCE April futures did not witness major spikes and remained steady at Rs 156 levels while May futures surged to Rs 158. 

Wheat 

India wheat futures are expected to continue the bearish trend in 2010 thanks to bumper crop and government decision not to go for exports. Higher temperatures in major growing regions were expected to curtail rabi output but scientists have allayed such fears and market has gone to bearish mode again. Temperature in major growing regions of Uttar Pradesh, Punjab, Haryana and Rajasthan are 4-6 degress centrigrade above normal. Government estimates the output to be 82 million tonnes around same levels as last year. Good, crop, early sowing and prolonger winter augurs well for the 2010 crop, agriculture analysts said. NCDEX April Futures fell from Rs 1138 to Rs 1119.160 before hitting intra-day lows of 1118. Prices are expected to fall further by Rs 50 per quintal on bearish market. 

Chana 

Chana futures continue to be undervalued even as recovery is seen in other major pulses varieties such as Urad and tur. However, last week, buying at lower levels helped sustain prices and a modest recovery was seen in NCDEX actively traded contracts. But gains were capped by increased arrivals from Madhya Pradesh and ample stocks. Maharashtra has exempted pulses from 4% Value Added Tax for another year. Fresh arrivals have started coming from Rajasthan and Madhya Pradesh. The acreage of chana is up at 8.92 mn ha as on March 11 agains t 8.35 mn ha a year ago. For the past week, higher arrivals in marketing centres of Indore, Nagpur, Delhi, Latur and Gulbara have strengthened bearish activity. 

NCDEX April contract gain from Rs 2182 to Rs 2286 while May contract from 2265 to Rs 2371. The April contract may test resistance level of 2375 soon on lower level buying. Moreover, festivals and marriage season ahead may provide some support for pulses. NCDEX April Chana has support at Rs 2100 and May has support at Rs 2200 levels.  (With analytical inputs from Angel Commodities, Mumbai)

(commodityonline.com)

Rubber Surges After Indonesia Says Output May Drop, Yen Weakens

By Aya Takada

March 25 (Bloomberg) -- Rubber surged after an Indonesian producers’ group warned that output may decline this year and a weakening of the Japanese currency raised the appeal of yen- based contracts for the commodity used to make tires.

Futures in Tokyo gained as much as 3.4 percent, matching the high set on March 9. The price peaked this year at 306 yen per kilogram ($3,332 a metric ton) on Jan. 15 on optimism that the global economic recovery will boost demand.

Output from Indonesia, the second-largest producer, may drop to 2 million tons this year from 2.4 million in 2009, the Rubber Association of Indonesia said. The yen fell to a two- month low against the dollar yesterday on speculation the European Union will fail to agree to measures to help Greece tackle its fiscal deficit at a meeting starting today.

“Futures gained because of a weaker yen and declining supply from Asian producers,” Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo, said today by phone.

Rubber for August delivery gained as much as 9.9 yen to 297.9 yen per kilogram on the Tokyo Commodity Exchange before settling at 297.6 yen.

Output from Indonesia may slump this year if unfavorable weather persists into the second half after rains disrupted first-quarter tapping, Asril Sutan Amir, chairman of the Rubber Association of Indonesia, said in an interview late yesterday.

Malaysian Output

Production last year in Malaysia shrank 20 percent to 860,000 tons as heavy rainfall hurt tapping, Bank Negara Malaysia said yesterday in a report, confirming earlier data.

Malaysian output this year may rebound 17 percent to 1 million tons, Minister for Plantation Industries and Commodities Bernard Dompok said in an e-mail earlier this month.

In the cash market, shippers in Thailand, the world’s largest producer and exporter, offered RSS-3 grade rubber for May shipment at $3.30 a kilogram today, unchanged from yesterday, Shigemoto said. The price increased from $3.27 on March 15 as output declined amid the low production season, he added.

During that period, known as wintering, rubber trees shed their leaves and latex production slows. In Thailand, the season lasts from February to April.

Rubber for September delivery advanced 2.4 percent to settle at 24,230 yuan ($3,549) a ton on the Shanghai Futures Exchange. Earlier, the price gained to 24,780 yuan, the highest level since March 8.

The Japanese currency was at 91.85 per dollar at 4:29 p.m. in Tokyo after falling to 92.40 yesterday, the weakest level since Jan. 12.

(businessweek.com)