Rubber in Tokyo Advances to Five-Month High as Weather Cuts Thai Supplies

Rubber in Tokyo climbed to a five- month high as wet weather in Thailand limited supply. Shanghai futures declined.

The most-active contract advanced as much as 1.1 percent to 313.2 yen per kilogram ($3,744 a metric ton), the highest level since April 28, before trading at 311.2 yen on the Tokyo Commodity Exchange at 11:59 a.m. The price is set to rise more than 15 percent this quarter, the best advance since the three months ended Dec. 31.

Wet weather disrupted tapping rubber trees in Thailand, curbing latex production. Shippers in Thailand, the largest producer and exporter, raised offers for so-called RSS-3 grade rubber for November shipment to about $3.60 a kilogram from $3.52 at the end of last week, said Hisaaki Tasaka, an analyst at Tokyo-based broker ACE Koeki Co.

“A strong physical market gave support to futures in Tokyo,” Tasaka said by phone today. “Considering costs for imports, it’s more economical to buy the contract for physical delivery in Tokyo.”

The March-delivery rubber on the Shanghai Futures Exchange lost 0.5 percent to 26,780 yuan ($4,002) a ton at 11:01 a.m. local time. The market came under pressure as investors were reducing long, or buy, positions before holidays, Tasaka said. China’s financial markets will be closed from Oct. 1 to Oct. 7 for National Day holidays.

The price earlier advanced to 26,955 yuan after data showed yesterday China’s manufacturing quickened in September, increasing speculation demand will expand from the largest user of the commodity used in tires.

China Manufacturing

A China purchasing managers’ index released by HSBC Holdings Plc and Markit Economics rose to 52.9, the highest in five months, from 51.9 in August. The data are seasonally adjusted and readings above 50 indicate an expansion.

Still, gains in Tokyo rubber futures were limited by concern that demand from Japan may weaken as a stronger yen threatens export-oriented manufacturers, Tasaka said.

Japan’s industrial production unexpectedly fell in August, adding to concerns the nation’s export-led recovery is slowing. Factory output decreased 0.3 percent from July, when it declined 0.2 percent, the Trade Ministry said in Tokyo today. The median estimate of 26 economists surveyed by Bloomberg News was for a 1.1 percent gain.

Signs of slowing global demand and the yen’s appreciation are threatening earnings of companies from Murata Manufacturing Co. to Nissan Motor Co. Exports grew at the slowest pace this year in August and the Bank of Japan’s Tankan survey yesterday showed companies forecast pessimists will outnumber optimists by year-end.

The yen traded at 83.55 per dollar at 12:03 a.m. in Tokyo after climbing yesterday to 83.50, the highest level since Sept. 15, when it touched a 15-year peak of 82.88.

Cash price in Thailand fell 0.2 percent to 109.15 baht ($3.58) per kilogram as investors are concerned over strengthening yen and local currency, Rubber Research Institute of Thailand said on its website yesterday.

Limited supply following persistent rainfalls in southern Thailand remains price supportive, it said.

(bloomberg.com)

Rising rubber prices: How will it impact tyre companies?

While the rubber prices have fallen from the recent peak, they are still quite high. In an interview with CNBC-TV18, AK Kinra, CFO, JK Tyre, speaks about the impact of rising rubber prices on tyre companies.

Below is a verbatim transcript of their interview with CNBC-TV18's Anuj Singhal and Latha Venkatesh. Also watch the accompanying video.

Q: The topic of discussions is rubber prices. We have seen while they have fallen from the recent peak, but they are still quite high. In fact we have an expert predicting a 60% rally from these prices. What is your outlook?

A: As far as the rubber prices are concerned, after seeing a peak of about Rs 194-195 a kg, currently these are hovering between Rs 165 to Rs 168 a kg. These are still very high as compared to what you see in the last one-and-a-half year.

In the last one-and-a-half year, the prices have almost gone up as much as about one and a half times. Since rubber constitutes as much as about 40% of the total cost of production, these comprise a very high proportion to the cost of tyre.

The prices of tyres have not moved in the same proportion as the cost of rubber. So, this is where the situation is. The situation is not being helped by an inverted duty structure whereby the import duty on the imported rubber is very high and on the end product, which is tyre is low. It should always be the other way round. The customs duty on the raw material should be lower than the duty on the end product. So, that situation is not being helped by it.

I think this situation is very difficult situation for the industry. Though the demand for tyre is very good, but the prices of tyres have still not moved in consensus with the rubber price increases.

Q: Since the demand for automobiles is very strong at this point, why is it that you are not able to pass on? How much do you think you will be able to pass on in October, what impact on margins?

A: In couple of months, I am not able to say how the prices will move, but I personally feel it will all depend upon how the natural rubber prices behave. But if the natural rubber prices are where they are currently, I think the prices may move up by 1% to 1.5%. But if the prices behave very erratically then naturally the prices of tyre will move up. This will be very difficult at this stage to estimate what kind of increases will take place in the near future.

(moneycontrol.com)

Apollo Tyres in rubber chase

Calcutta, Sept. 29: Apollo Tyres plans to acquire rubber plantations abroad to keep a check on rising raw material costs.

Onkar S. Kanwar, chairman and managing director of the company, said Apollo was scouting for acquisitions as well as exploring opportunities for new plantations in the south Asian region.

“We want to have at least 20-25 per cent of our natural rubber requirement from captive sources. Our people are now examining opportunities in Southeast Asia,” Kanwar told The Telegraph.

Indonesia, Thailand and Malaysia are the top three natural rubber producers, but Apollo may go to a new location with a similar climate (plenty of sun and rain), with Vietnam an option.

India is almost out of bounds for the nation’s top tyre manufacturer as large areas of land necessary for plantations are not available. Kerala is the largest producer of rubber, while the Andamans has similar conditions, but the government is not willing to allow plantations there.

Apollo uses 12,700 tonnes of natural rubber every month in its facilities in India, Africa and Europe. Natural rubber prices have jumped to Rs 180 a kg from Rs 100 a kg in the last one year, dealing a blow to profitability.

Apollo owns the Dunlop brand in 32 African nations and has plants in South Africa, Zimbabwe and Vredestein in the Netherlands, besides India..

New facilities

Apollo is keen to set up a facility in east Europe two years after its plan to enter the region suffered a setback because of political opposition to land acquisition in Hungary.

“We are fortunate it did not work out then as the economic slowdown followed soon after. But now we are eager again and ready to spend $200 million for it (the unit),” Kanwar said.

It is also keen on a manufacturing presence in Southeast Asia. Tyre is mostly a localised business, and a large domestic market is a pre-requisite for a manufacturing presence.

The new plants, along with the upcoming Chennai unit, will help Apollo to realise its ambition to become one of the top 10 manufacturers in the world.

(telegraphindia.com)

Spot rubber rules steady

On Wednesday (29 September 2010), the spot rubber prices ruled steady as the market managed to sustain at current levels mainly on supply concerns. Sheet rubber ended flat at Rs. 168.50 per kg in main marketing centres.

The October futures for RSS 4 declined to Rs. 171.50 (172.37), November to Rs. 173.30 (175032), December to Rs. 176.04 (177.19) and January to Rs. 178.25 (179.17) per kg on the National Multi Commodity Exchange.

Spot rates were (Rs/kg): RSS-4: 168.50 (168.50); RSS-5: 165 (165); ungraded: 162 (162); ISNR 20: 163 (163) and latex 60 per cent: 115.50 (115.50).

(indiainfoline.com)

Malaysia New Vehicle Sales Up 12.8% in August

Malaysia’s new vehicle sales in August rose from 48,937 units last year to 55,208 units this year or up 12.8% year on year, according to the Malaysian Automotive Association. The increase in auto sales in August this year was boosted by robust sales ahead of the Hari Raya festive period in September. 

The Association expected that auto sales for September would slow down after the festive period was over. For the first eight months, the auto sales rose from 351,846 units in 2009 to 409,806 units in 2010 year on year.

(irco.biz)

Vietnam's Rubber Export Rose in January-August Period

 Vietnam exported 427,000 tons of natural rubber (NR) in the first eight months, up 10.33% year-on-year with the value of US$1.15 billion, up 18.9% year-on-year, according a recent report by the Vietnam General Statistics Office.

In August, Vietnam exported about 100,000 tons of NR, earning US$250 million, an increase of 28% in volume and of 90% in value year-on-year.

Vietnam's major rubber export markets in this period are comprised of China, Malaysia, the Republic of Korea and India.

For 2010, Vietnam is forecast to export 770,000 tons of NR, up 6.4% in volume, according to a recent report by Xinhua News. 

(irco.biz)

A New Natural Rubber Export Tax Scheme

Thailand is going to increase a natural rubber (NR) export tax, which is currently collected at 1.4 baht per kg, to be 2 baht if the price stays below 80 baht per kg, to be 3 baht per kg if the price stays between 80 baht and 100 baht per kg, and to be 5 baht per kg if the price stays above 100 baht per kg respectively. The new scheme will be effective from 1 October 2010 onwards.

The objective of the above new scheme is to raise a national NR fund for multi-purposes of national rubber development, including financial support for rubber-smallholders when NR prices fall below their costs of living. Furthermore, it will be an incentive for foreign investors to invest and to produce more finished rubber products in Thailand at lower costs of production than overseas.

(irco.biz)

India's NR Imports Declined by 17% in August

India imported 18,834 tonnes of natural rubber (NR) in August, down 17% from 22,640 tonnes last year. The total NR import to India was mostly consumed by tyre manufacturers. For the April-August period of the current fiscal year, imports declined by nearly 28% to 75,042 tonnes from 103,483 tonnes in the same period of 2009, according to the Indian Rubber Board.

However, India’s NR production in August rose by nearly 12% to 72,500 tonnes, compared with the same month last year on an increase of acreage under rain guarding, a system which prevents rain from interfering with the tapping of rubber trees. In August 2009, India had produced 64,750 tonnes of NR. Consumption in August this year dipped slightly to 79,000 tonnes from 79,750 tonnes a year ago.

(irco.biz)

Rubber Advances to Five-Month High on Outlook for Improvement in Demand

Rubber gained for a third day to the highest price in almost five months after the Federal Reserve said it may ease monetary policy further to spur growth, boosting the demand outlook for the commodity used in tires.

Futures in Tokyo advanced as much as 2 percent to 311.5 yen per kilogram ($3,669 a metric ton), the highest level since April 28. The price jumped 3 percent yesterday, the largest gain in two months, on expectations that the global market is set for the worst shortage in four years next year.

The Federal Open Market Committee said yesterday that it is “prepared to provide additional accommodation if needed to support the economic recovery.” The dollar weakened and gold climbed to a record for a fifth day on speculation Chairman Ben S. Bernanke will purchase additional U.S. government securities in the coming months in a bid to lower long-term interest rates.

“The statement boosted speculation that the Fed may ease monetary policy further to support the economy, which is positive for commodities,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone.

February-delivery rubber rose as much as 6.1 yen, before settling at 309.7 yen on the Tokyo Commodity Exchange.

“The Fed’s remarks spurred optimism that demand for the rubber may grow,” said Sureerat Kunthongjun, an analyst at Agrow Enterprise Ltd. “Supplies remain limited in top producing nations as rains disrupted tapping, lowering production,” she said by phone from Bangkok.

Heavy Rains

The cash price in Thailand, the largest exporter, advanced for a third day, rising 0.7 percent to 108.35 baht ($3.54) per kilogram as rains continue in the country’s main plantation areas, limiting supply availability, the Rubber Research Institute of Thailand said on its website today. Some companies accelerated purchases to ensure they meet delivery commitments, the institute said.

Drought earlier this year followed by heavy rains have hampered tree-tapping across plantations in Asia, according to Pongsak Kerdvongbundit, managing director of Phuket, Thailand- based Von Bundit Co.

Persistent rains will probably continue across the country in the second half of September, the Thai weather office said on its website.

Natural-rubber consumption will outpace supply by 127,000 tons next year, the widest production deficit since 2007, according to Goldman Sachs Group Inc. Stockpiles will drop 12 percent to 67 days of demand in 2011, the lowest level in at least 11 years, the bank estimated in a report this month.

“While supply remains tight throughout this year, the possibility of change is remote in 2011 also,” Jom Jacob, senior economist at the Association of Natural Rubber Producing Countries, said in a monthly statement yesterday.

The Shanghai rubber market is closed today for a holiday. The March-delivery contract advanced to 26,920 yuan ($4,024) a ton yesterday, the highest level since July 2008.

(bloomberg.com)

Rubber shortage driving up tire prices

Goodyear Tire & Rubber and Cooper Tire & Rubber, the two largest U.S. tiremakers, will raise tire prices as much as 6.5% next month -- after already raising prices in June -- because of a worldwide shortage that has pushed up rubber costs, according to a report here by Bloomberg News.

And Bridgestone, the worlds biggest tire seller, is raising prices 6% in Europe, the second rise this year, thanks to the biggest shortage of raw material -- which also is used in gloves and condoms -- since 2007.

"Drought earlier this year and heavy rains later on hampered tree-tapping across Asian plantations," Pongsak Kerdvongbundit, managing director of Thailand-based Von Bundit, the largest natural-rubber producer and exporter, told Bloomberg. Thailand and Indonesia are the world's top rubber countries. "Global production will lag behind soaring demand for at least another two years."

While it may not seem like it in the U.S., economies are picking up steam elsewhere in the world and expected to push rubber consumption up 9.4% this year to 10.31 million tons, the fastest increase since 2004, the Singapore-based International Rubber Study Group told Bloomberg. Driving that in part will be an 8% rise in world auto sales this year and 7.2% next year, according to Ashvin Chotai, London-based managing director at Intelligence Automotive Asia.

Tiremakers are passing on the higher costs:

"We don't do a lot of raw-material hedging" said Keith Price, a spokesman for Akron, Ohio-based Goodyear. Raw-material costs are expected rise 30%-35% this quarter from a year ago and another 30% in the fourth quarter, the company said on a conference call July 29.

Current prices of $3,370 a ton for so-called Technically Specified Rubber used in tiremaking now are 53% more expensive than synthetic alternatives made from oil, data compiled by Bloomberg show. But it's impossible for tiremakers to substitute immediately synthetic for natural rubber, said Yuichiro Isayama of Goldman Sachs in Tokyo.

(usatoday.com)

Decline in spot rubber prices

On Tuesday (21 September 2010), the spot rubber declined as the market was in a holiday mood owing to Sree Narayana Guru Samadhi day. Also, the reports from the domestic futures were not promising though the National Multi Exchange contracts gained marginally during the closing hours. The trend was partially mixed as ISNR 20 rose due to better demand. Sheet rubber declined to Rs 165 from Rs 165.50 per kg amidst scattered transactions.

The October futures for RSS 4 rose marginally to Rs 165.97 (165.21), November to Rs 166 (165.43), December to Rs 168.23 (167.60) and January to Rs 170 (169.53) per kg on the National Multi Commodity Exchange.

Spot rates were (Rs/kg): RSS-4: 165 (165.50); RSS-5: 161.50 (162); ungraded: 158 (159); ISNR 20: 157 (156) and latex 60 per cent: 114 (115).

(indiainfoline.com)

China's Tire Output Up 11.50% in August

China's tire output rose 11.50% to 68.02 million units in August from the previous year. For the January-August period, the total tire output grew by 23.90% year-on-year to 512.16 million units, according to China's National Bureau of Statistics.

(Irco.biz)

Biggest Rubber Shortage in Four Years Means 20% Rise in Tiremaker Expenses

Bridgestone Corp., the largest tiremaker by sales, is raising European prices for the second time this year and Goodyear Tire & Rubber Co. is charging more as rubber gains on prospects for the biggest shortage since 2007.

“Drought earlier this year and heavy rains later on hampered tree-tapping across Asian plantations,” said Pongsak Kerdvongbundit, managing director of Phuket, Thailand-based Von Bundit Co., the largest natural-rubber producer and exporter in the world’s biggest supplier. “Global production will lag behind soaring demand for at least another two years.”

Stockpiles of the raw material, also used in gloves and condoms, will drop 12 percent to 67 days of demand next year, the lowest level in at least 11 years, according to Goldman Sachs Group Inc. Consumption will outpace supply by 127,000 metric tons, the most since 2007, the bank estimates. Futures traded in Singapore may jump 20 percent by March, said Makoto Sugitani, a senior director at Newedge Japan Inc., who correctly predicted the rally in January. Based on the Sept. 14 forecast, that would mean a record of about $4.20 a kilogram (2.2 pounds).

Sales of rubber are increasing the most in six years, helped by what the International Monetary Fund says will be the fastest global economic growth since 2007. Rain and flooding in Thailand and Indonesia, the top producers, drenched farms and curbed harvesting. Michelin & Cie., the world’s second-biggest tiremaker, said in July that commodity costs would cut full-year earnings by as much as 650 million euros ($850 million).

Shrinking Stockpiles

Futures may climb as much as 14 percent to $4 a kilogram by March on the Singapore Commodity Exchange, according to the median estimate of nine brokers and analysts surveyed by Bloomberg. Prices reached a record $4.11 on April 15 and closed at $3.50 on Sept. 20, for an advance of 22 percent this year.

Inventories will drop almost 6 percent to 2.05 million tons next year, for a third annual decline,Yuichiro Isayama and three other analysts at Goldman Sachs in Tokyo said in a report Sept. 3. La Nina, a phenomenon linked to extreme weather, is likely to intensify at the end of the year, according to the Thai weather office. That may cause higher-than-normal rainfall in the south, which has 68 percent of the country’s plantations.

Global consumption will climb 9.4 percent this year to 10.31 million tons, the fastest increase since 2004, according to the Singapore-based International Rubber Study Group, which says it has 16 countries and the European Union as contributing members. Demand will exceed output by 60,000 tons, from a surplus of 237,000 tons last year.

Commodity Advance

Bridgestone announced European price increases Aug. 30. Goodyear and Cooper Tire & Rubber Co., the two largest U.S. tiremakers, confirmed Sept. 17 they would raise U.S. prices from next month to recoup higher raw-material costs. Both companies said they last raised retail prices in June.

World auto sales will increase 8 percent to 68.5 million units this year and 7.2 percent to 73.4 million units next year, according to Ashvin Chotai, London-based managing director at Intelligence Automotive Asia Ltd. The economy in China, the biggest auto market, will expand 8.9 percent next year, more than three times the pace of the U.S., according to the median of as many as 60 economists’ estimates compiled by Bloomberg.

Even as governments fret about deflation, or declining consumer prices, extreme weather from drought in Russia and Ukraine to flooding in Pakistan and Canada is driving commodity costs higher. Wheat as much as doubled since June, while corn rallied to a 23-month high, coffee reached a 13-year peak and cotton advanced to its most expensive since 1995. A United Nations price-index of 55 foods rose to its highest level since September 2008 last month.

‘Chase a Rally’

“Rubber may chase a rally in grains and soft commodities as investors are searching for better places to put their money,” said Tokyo-based Sugitani of Newedge.

The U.S. producer price index increased 0.4 percent in August, the most in five months and twice the gain in July, the Labor Department reported Sept. 16.

Growth in demand for rubber may be undermined by a faltering recovery. Global economic expansion will probably slow in the second half of this year and in the first half of 2011, IMF economists said in a report Sept. 10.

Confidence among U.S. consumers unexpectedly dropped to a one-year low in September. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 66.6 from 68.9 in August, the group said Sept. 17, while U.S. unemployment is close to a 26-year high.

Cooling Economies

U.S. industrial output increased 0.2 percent in August after a 0.6 percent gain in July, the Federal Reserve said Sept. 15. Manufacturing in the New York region grew this month at the slowest pace in more than a year, said another Fed report.

Auto sales in the U.S. in August were the worst for the month in 28 years, according to Autodata Corp., a researcher in Woodcliff Lake, New Jersey. Passenger-car deliveries to Chinese dealerships in July gained at the slowest pace in 16 months, the China Association of Automobile Manufacturers reported. Almost 60 percent of the world’s rubber is consumed by the tire industry, according to the International Rubber Study Group.

The Standard & Poor’s 500 Index dropped 7.7 percent from this year’s high of 1,219.80 on April 26 on concern the recovery is slowing, while the Standard & Poor’s GSCI Index of 24 commodity futures declined 4.9 percent since the gauge reached 555.729 on May 3. Treasuries returned 5.5 percent since then.

Demand from China and India may have peaked as governments seek to cool their economies and deflate property bubbles, said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co. Rubber futures declined 12 percent since advancing to a 21-month high of 338.5 yen a kilogram on April 16 on the Tokyo Commodity Exchange. They gained 8.5 percent this year.

Bridgestone, Goodyear

Tiremakers are passing on the higher costs. Bridgestone said Aug. 30 that it will raise tire prices in Europe from October by as much as 6 percent. Increases by Goodyear and Cooper were for as much as 6.5 percent starting next month.

“We don’t do a lot of raw-material hedging” said Keith Price, a spokesman for Akron, Ohio-based Goodyear. Raw-material costs are expected to jump by 30 percent to 35 percent in the third quarter from a year earlier and by about 30 percent in the following quarter, Chief Financial Officer Darren R. Wells said on a conference call July 29.

Top Glove Corp., based in Selangor, Malaysia, and the world’s biggest rubber-glove maker, passes on “the majority” of higher costs, Executive Director Lim Cheong Guan said.

Rising costs are “a headache,” said Sakae Kubota, managing director of Okamoto Industries Inc., Japan’s biggest condom maker. Competition and demand mean the company is absorbing the extra expense, the executive said.

Tumbling Inventories

Prices of $3,370 a ton for so-called Technically Specified Rubber used in tire manufacturing are 53 percent more expensive than alternatives made from oil, data compiled by Bloomberg show.

Goldman Sachs’s Isayama said it’s impossible for tiremakers to substitute immediately synthetic for natural rubber, and even if substitution occurs, the volume should be limited to several percent of total consumption.

Stockpiles monitored by the Shanghai Futures Exchange and the Tokyo Commodity Exchange have slumped. Shanghai inventories plunged 72 percent in the past year while those reported by Tocom tumbled about 47 percent.

Thailand’s production may drop as much as 5 percent to 3 million tons this year as rain disrupts tapping, according to Pongsak. Output in Indonesia, the second-largest grower, may total 2.4 million tons, less than an earlier estimate of 2.6 million tons, said Suharto Honggokusumo, executive director of the country’s rubber association.

“Demand keeps expanding and supplies are at risk,” said Tetsu Emori, a commodity fund manager at Astmax Co. in Tokyo, who says prices may reach a record by early next year. “The situation may reach a critical point.”

(Bloomberg.com)

IRCo's WEEKLY MARKET SNAPSHOT: 13 - 17 September 2010

IRCo's DCP fell slightly to 337.71 US cents/kg on Friday from 338.20 US cents/kg on Monday or down 0.49 US cent whereas physical natural rubber (NR) prices in Thailand, Indonesia, and Malaysia also softened slightly in the wake of the fall of rubber futures on Tokyo Commodity Exchange (TOCOM) caused by the consecutive fall in crude oil futures, the fluctuation in the strengthening yen against the greenback, and the news on easing NR supply in producing countries during the week that NR supply actually remained tight as scattered rains across the region still disrupted rubber tapping in many NR producing countries, especially in Southern Thailand.

The global stock market started with the upbeat news on strong Chinese economic data and new Basel rules on Monday that gave hope to consumers and investors and ended with some gains in Asia and the U.S. but Europe due to concern over Ireland’s economy on Friday. The year-to-date returns for the major bellwether stocks, i.e. Dow Jones Index, Nikkei 225, and Shanghai Composite were 1.6%, -8.7%, and -20.7% as of 17 September 2010.

The global forex market also gained from better-than-expected Chinese economic data and the new agreement on global banking rules on Monday. However, currency volatility is expected to persist in the coming week due to concern over high Western sovereign debts, the fragile U.S. economy, the Japanese economic stagnation with deflation and the strong yen, and the strengthening regional currency against the greenback.

(irco.biz)

South African Labor Union Says 4,000 Tire Workers Plan to Protest Over Pay

The National Union of Metalworkers of South Africa said 4,000 of its members in the tire- manufacturing industry will protest today in Port Elizabeth, in the Eastern Cape over pay and working conditions.

Workers from local units owned by Firestone, Goodyear Tire & rubber Co. and Continental AG will participate in the protest march, the labor union said in an e-mailed statement.

(bloomberg.com)

Rubber Set for First Gain in Three Weeks on Weaker Yen, Recovery Signs

Rubber increased, heading for the first weekly gain in three weeks, as the yen weakened against the dollar and signs that economic recovery will be sustained boosted the appeal of the commodity used to make tires.

Futures in Tokyo climbed as much as 0.8 percent, gaining for the first time in three days. The price also increased as a drop in the dollar against the euro renewed investor interest in commodities as alternative assets.

The yen traded near a five-week low against the euro before reports that economists said will show German producer prices rose and U.S. consumer confidence improved, sapping demand for safer assets. Asian stocks advanced as a weak yen boosted the outlook for Japan’s exporters.

“Rubber futures draw support from the currency and equity markets,” said Takaki Shigemoto, an analyst at JSC Corp. in Tokyo. “A pessimistic view about the economy is fading as Japan took action to support a recovery.”

February-delivery rubber gained as much as 2.2 yen to 295 yen per kilogram ($3,440 a metric ton) before trading at 294.6 yen on the Tokyo Commodity Exchange at 12:16 p.m.

Yen Weakens

The yen traded at 85.73 per dollar against 85.78 in New York yesterday. Japan sold the currency this week after it climbed to 82.88, the strongest since May 1995, threatening the nation’s export-led economic recovery. Prime Minister Naoto Kan said yesterday his government won’t tolerate “rapid movements” in the yen and is ready to take “decisive measures.”

German producer prices gained 0.3 percent in August from July, when they climbed 0.5 percent, according to a Bloomberg News survey before the report today.

The Thomson Reuters/University of Michigan preliminary index of U.S. consumer sentiment advanced to 70 in September from 68.9 in August, another Bloomberg survey showed before today’s data.

Gains in rubber futures were limited as the nearest-dated contract in Tokyo extended losses amid speculation that physical deliveries may increase when the contract expires.

September-delivery rubber on the Tokyo Commodity Exchange, which will expire on Sept. 24, slumped 1.3 percent to 285.8 yen, extending losses for a third day.

Investors sold the contract amid speculation that as much as 2,570 tons of rubber may be delivered when it expires, Shigemoto said. The volume could more than double from 1,080 tons of physical delivery at the spot contract’s expiry last month, according to Norikazu Takei, a Tocom spokesman.

March-delivery rubber on the Shanghai Futures Exchange added 1.7 percent to 25,590 yuan ($3,804) a ton.

Auctioned prices in Thailand declined as a strengthening local currency made the commodity more expensive for overseas buyers, according to the Rubber Research Institute of Thailand. The price of ribbed smoked sheets dropped 0.5 percent to 104.50 baht ($3.39) per kilogram, it said yesterday.

(bloomberg.com)

Intl meet on rubber to be held in kochi in October

Government officials from 11 rubber-growing Asian countries will discuss the opportunities and challenges facing the rubber industry at a five-day international conference scheduled to take place here from October 4-8.

The conference would be the 33rd assembly of the Association of Natural Rubber Producing Countries (ANRPC) which has Cambodia, India, China, Indonesia, Malaysia, Papua New guinnea, Philippines, Singapore, Sri Lanka, Thailand and Vietnam as its members. The association represents 94 per cent of the total rubber-growing area in the world.

According to the programme schedule, the meet on rubber will be held on October 6 with the theme 'Natural rubber industry in the new decade – Opportunities, Challenges and Working Avenues'.

Apart from discussions on various developments in rubber cultivation, production and consumption, study reports prepared by the ANRPC and the International Rubber Study Group (IRSG), covering emerging aspects of rubber cultivation in the next decade (2011-20), would be presented at the conference.

Along with the assembly, there will be meetings of the executive committee and various technical committees of ANRPC. The venue for both the meetings is the Hotel Le Meridien.

ANRPC was founded in 1970 with Kuala Lumpur (Malaysia) as its headquarters. Vietnam holds the chair of ANRPC currently while India is the vice chair.

(business-standard.com)

Rubber Drops a Second Day on Speculation Physical Deliveries May Increase

By Aya Takada and Supunnabul Suwannakij - Sep 16, 2010 3:16 PM GMT+0700

Rubber dropped for a second day, led by a slump in the nearest-dated contract, amid speculation that physical deliveries may increase when the contract expires next week.

September-delivery rubber on the Tokyo Commodity Exchange, which will expire on Sept. 24, plunged as much as 4.7 percent to 284 yen per kilogram ($3,324 a metric ton), extending yesterday’s 1.8 percent drop, before settling at 289.5 yen.

Investors sold the contract amid speculation that as much as 2,570 tons of rubber may be delivered when it expires, said Takaki Shigemoto, an analyst at JSC Corp. in Tokyo. The volume could more than double from 1,080 tons of physical delivery at the spot contract’s expiry last month, according to Norikazu Takei, a Tocom spokesman.

“The market was weighed down by concern that a larger volume of rubber deliveries may depress prices,” Shigemoto said by phone today.

February-delivery rubber, the most-active contract on the Tokyo exchange, lost as much as 1.3 percent to 292 yen per kilogram before settling at 292.8 yen.

Futures also declined as crude oil dropped, weakening the appeal of natural rubber as an alternative to synthetic products used in tires. Oil fell for a third day in New York after a U.S. government report showed fuel demand declined last week and as Enbridge Energy Partners LP prepared to restart a pipeline after repairs, easing supply concerns.

Crude for October delivery fell as much as 1.3 percent to $75 a barrel in electronic trading on the New York Mercantile Exchange in Asia.

Weak Data

Worse-than-expected economic data in the U.S. renewed concerns that the world’s largest economy may slow, hurting demand for raw materials, Shigemoto said.

Industrial production in the U.S. cooled in August to 0.2 percent after a 0.6 percent gain in July that was smaller than previously estimated, figures from the Federal Reserve showed. A separate report showed manufacturing in the New York region expanded this month at the slowest pace in more than a year.

March-delivery rubber on the Shanghai Futures Exchange dropped 0.5 percent to close at 25,170 yuan ($3,740) a ton.

Auctioned prices in Thailand declined as a strengthening local currency made the commodity more expensive for overseas buyers, according to the Rubber Research Institute of Thailand. Price of ribbed smoked sheets dropped 0.5 percent to 104.50 baht ($3.39) per kilogram, it said.

(bloomberg.com)

Rubber imports to rise 42%

India is likely to witness a 42 per cent rise in natural rubber imports as against the earlier estimate of 70,000 tonnes made by the Rubber Board of India, on the back of lower import duties and sound growth of the automotive sector.

“In all likelihood, imports will be higher than 100,000 tonnes this financial year due to higher demand in the domestic market,” Sajen Peter, the chairman of the Rubber Board said on the sidelines of the Upasi annual general meeting here.

According to data with the Rubber Board, total imports during April-August exceeded its estimate and were around 77,577 tonnes.

The country produced 831,400 tonnes rubber in 2009-2010 and is estimated to produce 7.5 per cent more over last year to 893,000 tonnes in the 2010-11 period.

On domestic pricing, Peter said, “In the last two to three months, there were concerns related to pricing as domestic prices were higher than international prices. However, domestic prices are now at the same level as international prices. In the near term, pricing will remain at this level.”

He, however, said price fluctuation in the domestic futures market remained a concern.

“There have been demands for reducing the upper cap in commodity exchanges to two per cent to check price fluctuation and discourage speculation,” he added. The present upper circuit is four per cent.

(business-standard.com)

Rubber Advances for a Second Day as Growth Concerns Ease on China, Europe

Rubber climbed for a second day as Asian equities advanced on signs that economic growth may strengthen in China and Europe, easing concern that demand may weaken for the raw material used to make tires.

Futures in Tokyo rallied as much as 1 percent to 297.8 yen a kilo ($3,573 a metric ton). Gains were limited as the yen climbed to a 15-year high against the dollar.

Asian equities gained for a fourth day after China’s Premier Wen Jiabao said the nation is in “good shape,” and after the European Commission said Europe’s economy may grow almost twice as fast as previously forecast this year. The advance in stocks increased investor appetite for raw-material futures, said Hisaaki Tasaka, an analyst at Tokyo-based broker ACE Koeki Co.

“Rubber chased a rally in stocks and oil as concerns about economic recovery recede,” Tasaka said today by phone.

February-delivery rubber settled at 297.1 yen on the Tokyo Commodity Exchange. The most-active contract has advanced 7.6 percent this year.

“China’s economy is now in good shape, featuring fast growth, gradual structural improvement, rising employment and basic price stability,” Wen said yesterday at the World Economic Forum’s Summer Davos meeting in China’s northern port city of Tianjin.

Gross domestic product in the 16-nation euro region may increase 1.7 percent this year, instead of the 0.9 percent projected at the depth of Europe’s fiscal crisis in May, the Brussels-based commission said in a report yesterday.

“The sense of uncertainty about the future of the global economy is easing,” said Masumi Yamamoto, a market analyst at Tokyo-based Daiwa Securities Capital Markets Co.

March-delivery rubber on the Shanghai Futures Exchange dropped 0.4 percent to close at 25,650 yuan ($3,802) a ton.

Natural-rubber inventories dropped 600 tons to 25,220 tons, the Shanghai Futures Exchange said Sept. 10, based on a survey of 10 warehouses.

Rubber processors continue building up positions before a new levy on Thai rubber exports takes effect on Oct. 1, Chaiwat Muenmee, analyst at Bangkok-based commodity broker DS Futures, said by phone today from Bangkok.

(bloomberg.com)

IRCo's WEEKLY MARKET SNAPSHOT: 6 - 10 September 2010

IRCo's DCP fell to 337.25 US cents/kg on Thursday from 338.21 US cents/kg on Monday or down 0.96 US cent due mainly to the bearish news on Shanghai rubber futures and a strengthening yen against the greenback. However, firm crude oil futures and an uptrend on physical rubber markets during the week could stop a fall in rubber futures at a certain level. The decline of Japan's crude rubber inventories totaled 4,144 tons as of 31 August or down 4.2% from 20 August, according to the Rubber Trade Association of Japan, indicated some shortage of rubber in the country.

 Asian stock markets settled higher after China's domestic consumption showed some rises even as Beijing continues its campaign to cool the economy while Wall Street also ended higher for the second straight week due to increased expectations for global oil demand on Friday. However, European stock markets finished the week on a subdued note on Friday as performance of most financial banks in the euro zone was lower-than-expectations, especially Deutsche Bank of Germany.

 On the financial front, foreign exchange investors are seeking for safe havens and higher yield currencies with strong links to economic expansion in China and other emerging economies, including Southeast Asian countries such as Thailand, Indonesia and Malaysia, because the U.S. and European economies have shown some uncertainty, and it looks like that their economic growth might slow down somewhat in 3Q10 and 4Q10. These encourage foreign exchange investors to park their money on Asian forex markets and cause the currencies in this region to continue strengthening against the greenback further, including the Japanese yen. In addition, crude oil futures on New York Mercantile Exchange rebounded slightly on Friday after a pipeline leak in Illinois rattled traders worry about its effect on supplies. However, its rise should be short-lived because the global economy remains fragile.

(irco.biz)

Rise in spot rubber prices

On Monday (13 September 2010), the spot rubber prices rose following the sharp gains on NMCE. Sheet rubber increased to Rs 169 from Rs 167.50 per kg on fresh buying and short covering.

The September futures for RSS 4 rose to Rs 172.84 (169.83), October to Rs 169.67 (164.92), November to Rs 169.02 (164.71) and December to Rs 171.20 (166.63) per kg on the National Multi Commodity Exchange.

Spot rates were (Rs/kg): RSS-4: 169 (167.50); RSS-5: 165 (162.50); ungraded: 162 (158); ISNR 20: 154 (152) and latex 60 per cent: 114 (112). 

(indiainfoline.com)

Global Rubber Demand in 2011 Up 6.7% on Year

The International Rubber Study Group (IRSG) forecast that global rubber demand is expected to rise from 23.9 million tones in 2010 to 25.5 million tons in 2011 or up 6.7%. It also forecast that the-12-month consumption of rubber to June will reach 23.1 million tons, up 11% year on year. The IRSG further forecast that demand for NR this year will be around 13.3 million tons. For NR production, the IRSG expects global NR production to rise by 6.1% to 10.25 million tons in 2010 and by a further 7.3% to 11 million tons in 2011. 

(Irco.biz)

India's Auto Sales Surged to Record High in August

Auto sales in India surged to a record high of 33% in August to 160,794 units from 120,681 a previous year on the back of lower borrowing costs, introduction of new models and forthcoming festivals, according to the Society of Indian Automobile Manufacturers. Nowadays India is still one of the lowest number of cars per 1,000 people among major automobile markets worldwide that there is room to grow, according to KPMG. This led to the rise in car sales during April – August to 753,199 units, up 34%, according to SIAM. For export of cars in August, the figure climbed 28% to 191,033 units.

(Irco.biz)

Indonesia Revised Rubber Forecast Down on Rains

Indonesia's Rubber Association revised the forecast of rubber output for 2010 to 2.4 million tons to 2.5 million tons from 2.6 million tons due to tapping disruption by prolonged rains that La Nina brought them into the region since July, Suharto Honggokussumo, executive director of Indonesia’s Rubber Association said on 9 September.

(Irco.biz)

US Imports NR Up in July

13 September 2010 – U.S. imported technically specified natural rubber in July totalling 52,809 tonnes or up 16.1% from June, and was up 31.9% from the previous year, according to the U.S. Commerce Department.

(Irco.biz)

Malaysia rubber exports rise in July

Natural rubber production rose by 10,338 tonnes or 14.6 per cent to 81,083 tonnes in July compared to June, the Statistics Department sid today.

Production, however, dwindled by 1,821 tonnes from 82,904 tonnes on a year-on-year basis, it said.

The main portion of natural rubber production was contributed by the smallholding sector, with 93.2 per cent, while the estate sector accounted for only 6.8 per cent, it said in a statement today.

Natural rubber exports in July increased by 5.8 per cent as compared to June while exports on a year-on-year basis surged strongly by 22.5 per cent, it said.

The Standard Malaysian Rubber (SMR) continued to be the main contributor to exports, recording 71,318 tonnes, of which, 55.6 per cent was SMR20, it said.

The main natural rubber consuming industry was rubber gloves at 72.4 per cent, followed by tyres and tubes at eight per cent and rubber thread at 5.5 per cent, the department said.

The three industries consumed 32,808 tonnes or 85.9 per cent of the total domestic consumption of natural rubber, it added.

(btimes.com.my)

Centre's decision on rubber import duty not justified: KM Mani

Kerala Congress (M) chairman KM Mani has said that the decision of the ministry of commerce to modify the import duty for rubber could not be justified.

Inaugurating Rubber Board Technical Guild, an organisation affiliated to Kerala Congress, and works for the welfare of technical employees of Rubber Board yesterday, Mani said the Centre earlier imposed import duty of 40% has reduced to 13% which should be reexamined.

The former minister said the price of rubber will come down if the centre imports one lakh tonne of rubber through this duty structure.

Mani reiterated his demand that the import cess for natural rubber be put back at 20% and thus save the interests of lakhs of growers in the country.

He assured that all efforts would be made to raise the status of Rubber Research Institute of India on par with Indian Council for Scientific Research.

He urged the Centre to revise the payscale and perks of employees of Rubber Research Institute of India at the earliest.

(dnaindia.com)