Tyre firms to again press rubber manipulation charge on NMCE

The Automotive Tyre Manufacturers Association (Atma) intends to persist with its charge of manipulation of natural rubber prices on the Ahmedabad-based National Multi Commodity Exchange (NMCE).

The Forward Markets Commission (FMC), the commodity markets regulator, has declined an Atma request to intervene. However, Atma plans to write again to FMC and NMCE in coming days, reiterating its point on the need for a reduction in the daily price band of the NMCE. “We have evidence for the price manipulation of natural rubber on the NMCE, which we are submitting to the FMC on (next) Monday or Tuesday,” said Atma director-general, Rajiv Budhraja.

Since the launch of rubber futures on the NMCE in 2003, the Delhi-headquartered Atma holds the exchange responsible for the price rise in natural rubber, the only raw material for tyre making. The claim was rejected each time it was raised, with the argument that the price movement was based on basic demand and supply.

Atma had, in the second fortnight of October, urged FMC to reduce the daily price band from the existing four per cent to one per cent. Terming the commodity derivatives exchange a place for speculative and manipulative trading, Atma had also urged the regulator to suspend trading in natural rubber.

The FMC had, on October 21, asked NMCE to clarify its stand and justify the price movement in natural rubber. The exchange did so on October 23. FMS told Atma last week, “The internal investigation found no clue leading to price rigging on NMCE. Hence, no action is required against the exchange in any form.” A renewed complaint was again rejected, with FMC saying, “A four per cent price band is in line with other agri commodities, plantation products and, most importantly, global markets.”

“You cannot give a too-wide or too-narrow price band to market participants,” an industry official said. Meanwhile, with a 10 per cent decline in production due to unseasonal rainfall, the price of natural rubber has risen to Rs 200 per kg (of the benchmark RSS-4), more than double the level in November last year. Usually, the price declines in November, as this is the time of peak production in Kerala, the major supplier.

Output this November is estimated at 82,000 tonnes as compared to 92,500 tonnes in the corresponding month last year. Apart from this, labour shortage is a serious issue in most plantations, even at high wages.

(Source: http://www.business-standard.com/india/news/tyre-firms-to-again-press-rubber-manipulation-chargenmce/416539/)

IRCo's WEEKLY MARKET SNAPSHOT: 22 - 26 November 2010

The three major bearish factors which caused investors and speculators to unwind their long positions on commodity markets, including rubber futures, in order to stop losses and to take profits during the week were--worries about European debt problems, tension in Korean peninsula and Chinese monetary tightening.

IRCo's DCP fell to 426.67 US cents/kg on Friday while rubber prices on the physical front also fell in tandem with rubber futures except for rubber latex. A strong greenback weakened commodity prices and regional currencies, especially a Japanese yen. Nonetheless, the current rubber supply tightness and continued growth of auto sales in China and other emerging market countries could lend support for the physical front to some extent. In addition, Wall Street ended mixed on Friday, but its trend was still in an upward direction on the back of investor confidence in the U.S. second quantitative easing program.

It is anticipated that investors and speculators are awaiting the European Union and the International Monetary Fund whether they will come up with a concrete measure to resolve the persistent European debt crisis, how does South Korea react against North Korea's attack last week, and whether China's central bank will introduce any additional measures to tighten its economy so as to tame high inflation in the coming week.

(Source: http://www.irco.biz/MarketWise.php?PHPSESSID=b2ccb645ea1552664592e322c3612e31)

The Rubber Market Remains Firm

Rubber futures and physical markets mostly retreated on 24 November from a day earlier in the wake of persistent concern about the Korean standoff, the euro zone debt crisis and expectations of further measures by Beijing to cool down its economy, according to Reuters on 24 November.

On 25 November, the new benchmark May Tocom rubber contract settled higher, following strong gains on Wall Street and Tokyo’s Nikkei index, rising commodity and oil prices. However, the most active rubber contract on Shanghai rubber futures settled lower on the same day as a recent government crackdown on excessive speculation in commodities and monetary tightening measures still weighed on the market, according to Dow Jones.

On the physical front, rubber prices mostly settled slightly higher on 25 November because of persistent supply tightness in producing countries and steady demand from tire and non-tire manufacturers whereas rubber exporters and importers were still cautious about price volatility on rubber futures. IRCo’s DCP almost reached 430 US cents/kg on the same day.

DESCRIPTION	24 NOV	25 NOV	CHANGE	% CHANGE	UNIT
IRCo's DCP	428.64	429.49	0.85		0.20%	US cents/kg
TOCOM/RSS3 *
- Dec. 10	354.90	359.60	4.70		1.32%	Yen/kg
- May. 11	359.50	362.70	3.20		0.89%	Yen/kg
SHFE/RSS3 **	31,980	31,975	-5		-0.02%	Yuan/ton
AFET/RSS3
- Dec. 10	130.00	130.00	0.00		0.00%	THB/kg
- Jun 11	130.50	129.00	-1.50		-1.15%	THB/kg
RRIT ***
- RSS3	131.50	131.80	0.30		0.23%	THB/kg
- STR20	129.70	130.00	0.30		0.23%	THB/kg
SIR20 ****	425.00	425.00	0.00		0.00%	US cents/kg
SMR20 ****	433.00	435.00	2.00		0.46%	US cents/kg

Source: IRCo

Note: * The day sessions, the spot and benchmark months on 24 Nov. were Nov.10./Apr.11

** The highest daily trading volume was May. 2011

*** RRIT means Rubber Research Institute of Thailand

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

Looking at some relevant factors, the U.S. unemployment claims fell more-than-expected 34,000 last week from the previous week to 407,000, according to Agence France Presse on 26 November. In Europe, the European Commission is pushing to double the size of Europe’s 440 billion euro (US$586.52 billion) bailout fund for indebted euro zone countries, according to WSJ on 26 November. Investors are still cautious ahead of the release of November’s inflation in China, said some investors. These variables are expected to be taken into consideration by the rubber market next week.

(Source: http://www.irco.biz/BlogMoreDetial.php?id=2715&ShowContent=news%20&PHPSESSID=b2ccb645ea1552664592e322c3612e31)

TOCOM Rubber declines on weak crude oil

International Market
Tokyo rubber may remain sideways, due to weak Yen and strong crude oil. The April futures have immediate resistance at 357.40 and 359.10. If it can break 360 mark with volumes then it may even move up towards 365.90. Support at 355.40 and 354.70. Chinese move to increase margins and daily price limit can cause huge bull liquidation and volatility back into the market.
Domestic Market
In the domestic market natural rubber December have support at 199.11 and 198.81. If it trades below more selling is expected. Heavy showers and landslides will support the natural rubber prices to a certain extent; because of this arrivals are very little. Resistance for the natural rubber will be at 200.61 and 201.50. Expect a sideways trend rather than a firm trend.
Analysis of Tokyo Rubber Market
The market fell sharply to the low of 351.7 yen and closed the session at 355.2 yen, loosing 7.5 yen, on a continuous loss in Shanghai rubber market for three days in a row. Following the night session, finished lower by 3.4 yen at 359.3 yen due to weakened oil prices and Shanghai rubber market yesterday after TOCOM closed, the day session resumed trading slightly higher at 359.8 yen on rebounded oil prices and bullish other commodity markets, and it gradually rose as high as 362.8 yen after opening in order to fill the gap with previous day session close.
But it lost ground to the low, at that time, of 355.1 yen as Shanghai rubber market plunged below 31,000 yuan and reached to limit down, 30,375 yuan, and the price ranged around 356 yen level afterward. Furthermore, due to declined oil prices and weaker Shanghai rubber market,stayed at limit down in the afternoon session, the price fell even more to trigger Circuit Breaker and enewed the day’s low at 351.7 yen. Massive selling did not last long and the market rebounded toward closing.
The Shanghai rubber market moved downwardly from opening and mostly stayed at limit down throughout the session, finally closed at 30,375 yuan with a loss of 1,600 yuan. Since the spread between TOCOM and SHFE narrowed quickly in these 2 weeks, selling pressure could be strengthened by arbitragers, thus, selling momentum could last little more while.
The market showed backwardation with a spread of about 1.7 yen in two forward contracts, meaning that rolling over by short position holders remained active compared to the activity by long position holders. It would be changing to contango market as funds start to roll their long position.
Rubber News
Rubber slumped as China, the largest user, will raise commodity futures margins to cool prices and as growers in Indonesia, the second-biggest exporter, boost output to benefit from record prices. May-delivery rubber on the Tokyo Commodity Exchange fell as much as 3 percent to 351.7 yen per kilogram ($4,191 a metric ton) before settling at 355.2 yen. The most-active contract, which reached a 30-year high of 383 yen on Nov. 11, is set for the worst weekly loss since July 2.
Futures in Shanghai tumbled by the daily limit to the lowest level since Oct. 13. Tokyo opened today with negative trend. Today though all contracts opened above the previous day’s close, soon the prices declined to as low as 352.8 yen. January and February contracts are trading with the highest loss for the day of 2.1 yen.
Most active May deliveries rose up to 357.2 yen and are currently trading at 354.4 yen making minor loss of 0.8 yen. Shanghai was closed on 26th with negative trend, all contracts making losses. Today also the March deliveries are trading with losses. The rubber stock with Shanghai Futures Exchange dropped by 90 tons and the current holding is 48265 tons.
In Thai market RSS 3 rubber futures June and July are trading with losses 1.10 baht per kg. There are no quotes for the contract at 9.28 IST.
AUTO SECTOR NEWS
Saab will sell about 25,000 vehicles this year as “sales are slumping,”Focus magazine reported, without saying where it got the information. Hyundai Motor Co. raised its China sales forecast for this year to 690,000 vehicles, from 670,000, and said the company’s third plant in the nation will make compact cars once production starts in the second half of 2012.
Crude Oil News

Oil rose in New York after European governments extended an 85 billion-euro ($113 billion) lifeline to debt-strapped Ireland and as a pickup in purchases by U.S. shoppers prompted optimism about fuel demand. The price of options to buy December 2011 futures at $100 a barrel jumped 14 percent on Nov. 24, the largest one-day gain in three months, according to data compiled by Bloomberg.
The January contract climbed as much as 39 cents, or 0.5 percent, to $84.15 a barrel, in electronic trading on the New York Mercantile Exchange, and was at $84.04 at 10:18 a.m. Sydney time. Brent crude for January settlement added 27 cents, or 0.3 percent, to $85.85 a barrel, on the Londonbased ICE Futures Europe exchange. So-called open interest for the contract has risen 51 percent this year to 45,424 lots, the highest for any crude option on the New York Mercantile Exchange.
Weather Report

In Malaysia at Kuala Lumpur thunderstorms and scattered rain are expected. Temperature may go up to 32 °C during day time. 60 per cent chance of precipitation is expected during the day time and night time. Temperature is expected to be at 23 °C at the low level.
According to the Jakarta Observatory, thunder storms and scattered clouds is expected. Day temperature may go up to 32 °C. There is 60 per cent chance for precipitation and temperature at low level will be 26 °C.
In Thailand, the climate is expected to be partly cloudy with 0-10 per cent chance of precipitation. Temperature may go up to 33°C during day time. Temperature is expected to be at 24 °C at the low level.
In Beijing, China, 0 percent chance of precipitation is expected. The climate is expected to be sunny and clear with wind. Temperature may go up to 6°C during day time. Temperature is expected to be at - 05°C at the low level.
In Singapore, thunderstorms and scattered clouds are expected with 60 per cent chance of precipitation. Temperature may go up to 31 °C during day time. Temperature is expected to be at 24 °C at the low level.
In Thiruvananthapuram, thunderstorms and scattered rain are expected with 60 percent chance of precipitation. Temperature may go up to 28 °C during day time. Temperature is expected to be at 24 °C at the low level. In Kottayam, scattered rain with thunderstorms is expected with 60 per cent chance of precipitation. Temperature may go up to 28 °C during day time. Temperature is expected to be at 23 °C at the low level.

(Source: http://www.commodityonline.com/futures-trading/technical/TOCOM-Rubber-declines-on-weak-crude-oil-20174.html)

M'sian rubber market seen to be steady this week

KUALA LUMPUR: Trading on the Malaysian rubber market is expected to be steady this week, amid a weak stock situation in the key producer countries of Indonesia, Thailand and Malaysia, a dealer said.

Prices are rising because of a demand-supply gap. The incessant rains in some parts of Malaysia has hit supply and this is expected to last until January, the dealer added.

The south of Malaysia have been badly affected by flooding caused by rains throughout the months of October and November, and has somewhat disrupted tapping and lowered production.

The SMR 20 breached its highest level of 1,351.0 sen per kg on Nov 11.

On a weekly basis, the Malaysian Rubber Board's official physical price for tyre-grade SMR 20 on Friday ended 10 sen lower at 1,319.5 sen per kg compared to previous Friday's closing of 1,329.5 sen, while latex-in-bulk rose 7.5 sen to 882.0 sen per kg.

The unoffical sellers' closing price for tyre-grade SMR 20 dropped 24.5 sen per kg to 1,313.0 sen per kg while latex in bulk went up 2.0 sen to 880.0 sen per kg. Bernama.

(Source: http://biz.thestar.com.my/news/story.asp?file=/2010/11/29/business/7515629&sec=business)

Tokyo rubber futures fall three percent

Tokyo  (november 25, 2010) : key tokyo rubber futures fell more than 3 percent on wednesday as global financial markets were rattled by heightened tensions in the korean pennisula following a north korean artillery attack on a south korean island near the border. the key tokyo commodity exchange rubber contract for april delivery settled at 359.5 yen per kg, down 10.3 yen or 2.8 percent. it fell as low as 356.4 yen, the lowest since november 18.

the april benchmark contract had climbed as high as 375.9 yen on friday, the highest since november 12. the benchmark contract will switch to may from thursday. deliveries against the november futures contract fell 25 percent from last month to 214 lots or 1,070 tonnes. the nearby november contract expired at 354.9 yen per kg. the most active rubber contract for may delivery on the shanghai futures market closed at 32,285 yuan ($4,859) per tonnes.

(Source: http://www.brecorder.com/news/agriculture-and-allied/world/1127488:tokyo-rubber-futures-fall-three-percent.html?hl=rubber)

Natural Rubber Supply May Beat Forecast on Indonesia, Producer Group Says

Natural rubber supply this year may be more than forecast last month as growers in Indonesia boost output to benefit from record prices, a producers’ group said.

Production may increase 6.6 percent to 9.5 million metric tons, more than the 9.4 million tons forecast on Oct. 27, the Association of Natural Rubber Producing Countries said in an e- mailed statement today. Supply may drop 3.8 percent in the three months to Dec. 31 as rain disrupts tapping in Thailand, the biggest producer and exporter, the group said.

Rubber in Tokyo has climbed 30 percent this year as rain in Thailand, Indonesia and Malaysia, the top three growers, interrupted tapping and lowered production. Futures on the Tokyo Commodity Exchange reached a 30-year high of 383 yen on Nov. 11.

Total supply would be more than earlier predicted because Indonesia’s estimates for the third and fourth quarter have “undergone major revisions to the higher side” against a downward adjustment for Thailand and Malaysia, Jom Jacob, the group’s senior economist, said in the statement.

Thailand’s rubber supply this year may drop 1.4 percent to 3.12 million tons and rebound 4.1 percent to 3.25 million tons next year, the group said. Indonesia’s output may jump 16.9 percent to 2.85 million tons this year and climb further to 2.94 million tons in 2011, it said.

The price boom appears “to have prompted the dominant smallholders in Indonesia to exploit the maximum possible yield from their trees,” Jacob said. Indonesia’s production gained 33.1 percent in the three months to Sept. 30 and may increase 18.6 percent in the October to December period, he said.

China Drop

China’s consumption of natural rubber, including compound rubber, may drop 2 percent in the fourth quarter as the government takes steps to cool commodity prices, the group said. Imports of all forms of natural rubber may climb 7.1 percent to 3.26 million tons this year and increase by 6 percent to 3.45 million tons in 2011, the group said.

“Natural rubber markets do not appear to have received any notable support from the demand side,” Jacob said. “Concerns over China’s new policy measures clouded demand expectations.”

April-delivery rubber on the Tokyo Commodity Exchange gained as much as 2.6 percent to 368.7 yen per kilogram ($4,419 a ton) before settling at 362.6 yen today.

Chinese Premier Wen Jiabao’s government has raised interest rates, increased the reserve requirement for banks and pledged to use price controls if needed as part of efforts to rein in inflation that reached 4.4 percent last month. Analysts at nine banks surveyed by Bloomberg News last week predicted the PBOC will boost borrowing costs a second time by the end of the year.

China’s recent moves to crack down on speculation in commodities have worked, and prices of goods from cotton to copper have all declined, the National Development and Reform Commission said in a statement on its website today.

(Source: http://www.bloomberg.com/news/2010-11-25/natural-rubber-supply-may-beat-forecast-on-indonesia-producer-group-says.html)

Rubber Futures Advance as U.S. Data Raise Demand Outlook, Supply Limited

Rubber increased as improvement in U.S. employment and consumer sentiment boosted speculation that demand will expand for the commodity used in tires, and as supply is limited from Thailand, the largest exporter.

April-delivery rubber on the Tokyo Commodity Exchange gained as much as 2.6 percent to 368.7 yen per kilogram ($4,419 a metric ton) before settling at 362.6 yen. The price reached a 30-year high of 383 yen on Nov. 11.

Asian stocks advanced after data showed U.S. jobless claims dropped to the lowest level since 2008, bolstering optimism that economic growth will accelerate. Rubber supply from Thailand and other Asian producers remains tight after rain and flooding disrupted plantation work, saidKazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co. in Tokyo.

“The market drew support from good economic data from the U.S.,” Saito said by phone today. “Fundamentals remain positive as supply is curbed by weather problems.”

The cash price of natural rubber in Thailand gained 0.2 percent to 131.55 baht ($4.38) per kilogram today, boosted by strong demand amid a supply shortage, according to the Rubber Research Institute of Thailand. The price reached a record 132.75 baht per kilogram on Nov. 23.

The U.S. Labor Department said jobless claims fell to 407,000 last week. The median projection of economists surveyed by Bloomberg News called for a drop to 435,000. The Thomson Reuters/University of Michigan final index of November consumer sentiment increased to 71.6, the highest level since June and exceeding the median economist estimate of 69.5.

Shanghai Futures

May-delivery rubber in Shanghai lost 1.8 percent to 31,690 yuan ($4,765) a ton at 2:42 p.m. local time. The price retreated from a record 38,920 yuan on Nov. 11 on concern that China, the largest consumer, may take additional steps to curb inflation and slow its economic growth, Saito said.

China’s central bank said it will strengthen liquidity management and “normalize” monetary conditions after having twice this month ordered banks to hold more in reserves to curb inflation that’s at a two-year high.

The nation will use quantitative and price tools to manage liquidity, Hu Xiaolian, a deputy governor of the People’s Bank of China, said in a statement posted to the central bank’s website yesterday. China will also control the pace of bank lending for the remainder of this year as it will be difficult to stay within the government’s 7.5 trillion yuan ($1.13 trillion) target for new loans in 2010, she said.

Premier Wen Jiabao’s government has raised interest rates, increased the reserve requirement for banks and pledged to use price controls if needed as part of efforts to rein in inflation that reached 4.4 percent last month. Analysts at nine banks surveyed by Bloomberg News last week predicted the PBOC will boost borrowing costs a second time by the end of the year.

China’s recent moves to crack down on speculation in commodities have worked, and prices of goods from cotton to copper have all declined, the National Development and Reform Commission said in a statement on its website today.

(Source: http://www.bloomberg.com/news/2010-11-25/rubber-futures-advance-as-u-s-data-raise-demand-outlook-supply-limited.html)

Rubber exporters worried

Thailand's rubber exporters are concerned Chinese policies to control inflation will impose import quotas.

China is among the world's largest natural rubber importers and is Thailand's biggest buyer, purchasing 1.16 million tonnes from the kingdom of the 2.46 million total it imported in 2009.

Luckchai Kittipol, president of the Thai Rubber Association, said exporters are concerned about import restrictions.

China's continued robust economy, especially in the automobile industries, has driven demand for rubber the past few years. Demand for rubber was 7.74 million tonnes last year _ 3.47 million tonnes of para rubber and 4.27 million of synthetic rubber.

This year, rubber demand is forecast to reach 8.11 million tonnes, comprising 3.44 million of natural rubber and 4.67 million tonnes of synthetic rubber.

China's capacity in tyre manufacturing totals 654.6 million units while it exports tyres at a rate of 123.22 million radial units.

China expects to buy over 30% of Thailand's 2.85 million tonnes of rubber exports this year.

Mr Luckchai is still optimistic this year's rubber exports will meet the association's target of 200 billion baht in income.

In the first nine months of this year, the country shipped two million tonnes of rubber products worth 170 billion baht.

The association is attending the 10th International Exhibition on Rubber Technology to be held today through Saturday at the Exhibition Centre in Shanghai to explore trade opportunities and showcase technologies and innovation in rubber products from Thailand.

(Source: http://www.bangkokpost.com/business/economics/208032/rubber-exporters-worried)

Tyre makers hit by surging rubber prices

Results for the September quarter were a non-event for tyre companies. While these companies were putting together the financials for the period, natural rubber price in the country (RSS-4 grade) shot up sharply beyond the quarter’s average price of around Rs.165 a kg. By mid-October, it jumped toRs.190 per kg and climbed further to the present level of around Rs.202 per kg. This is around 22% higher than last quarter’s average price. The fact that rubber costs account for almost half of the total cost of producing a tyre means that profit margins of these firms will be squeezed.

The surge in prices is not a recent short-term aberration either. Rubber prices have risen by as much as 150% in the past two years, from levels ofRs.76/kg in November 2008.

International prices, too, have shot up in a similar fashion, giving no opportunity for companies to import at lower costs. Reports suggest that the price in Thailand—the world’s largest rubber producing nation—at around $4.3 (Rs.196) a kg, has not only tripled since early 2009, but also surpassed the peak of 1952, when fears of Korean war triggered panic buying.

Prices are rising because of a demand-supply gap. Officials at the Rubber Board of India say that incessant rains hit supply this season. While the cultivation acreage is increasing, it would not be before 2012-13 that the new plantations would add to production. According to estimates by the Rubber Board, India’s rubber production is expected to increase by 9% to 890,000 tonnes in 2010. But demand, supported by the auto boom and high consumerism, would be higher at around 970,000 tonnes, according to industry experts. This gap in supply is expected to keep prices buoyant.

Globally, too, rains played havoc, resulting in lower production in three of the world’s largest rubber producing nations—Thailand, Indonesia and Malaysia. And this comes at a time when rubber inventories are at the year’s low in China.

Like global tyre firms, Indian companies have taken price increases to offset the impact of higher rubber prices. Leading tyre makers such as Apollo Tyres Ltd, MRF Ltd, Ceat Ltd and JK Tyre and Industries Ltd have increased tyre prices by 12-15% in the last one year.

Yet, as the chart indicates, all tyre makers have seen profitability steadily declining in the last four quarters. And this also despite increasing volumes, thanks to the boom in the auto sector. The reason is that raw material cost increases continue to surpass the hike in tyre prices. Apollo’s operating margin fell to 10.3% last quarter, down from 16.4% a year ago, while MRF’s margins fell by 690 basis points to 9.8%. Smaller firms were worse off; Ceat and JK Tyres reported wafer-thin margins of 4% and 6.2%, respectively.

Surjit Arora, an analyst at Prabhudas Lilladher Pvt. Ltd, says that tyre firms may see no respite in profit margins in the next two quarters, unless rubber prices soften. They would have to increase tyre prices by at least 3-6% to sustain the present profit margins.

Shares of all tyre makers have reacted adversely since the first quarter of fiscal 2011, due to fall in profitability and the grim outlook in the near term. Barring MRF, where strong management and low-liquidity support the share price and which rose 16% amidst these adversities, shares of Apollo, Ceat and JK fell by 6%, 10% and 27% from 1 April till date. But strong volumes and revenue momentum could turn the fortunes sharply if the key raw material gives respite.

(Source: http://www.livemint.com/2010/11/25212044/Tyre-makers-hit-by-surging-rub.html?atype=tp)

Rubber Futures Decline on China's Price-Cooling Moves, Tension Over Korea

Rubber declined for the first time in four days on concern that China’s measures to tame inflation may curb demand from the world’s largest user and after North Korea attacked South Korea, weakening investor risk appetite.

April-delivery rubber on the Tokyo Commodity Exchange slumped as much as 3.6 percent to 356.4 yen per kilogram ($4,283 a metric ton) before settling at 359.5 yen. It also dropped as Standard & Poor’s Ratings Services cut Ireland’s credit rating, raising concern that Europe’s debt crisis may stall the region’s economic recovery. The market was closed yesterday for a holiday.

China will crack down on the use of loan funds in speculation, hoarding and artificially inflating prices of agricultural products, the China Banking Regulatory Commission said on Nov. 22, sending rubber futures in Shanghai tumbling by the daily limit yesterday. South Korea’s stocksand currency sank after North Korea fired artillery, killing two soldiers.

“Rubber was sold as tension in Korea sapped investor appetite for risk assets,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone. “Caution about China’s steps to curb inflation was another drag on rubber futures.”

May-delivery rubber fell as much as 2.9 percent to 31,300 yuan ($4,707) a ton before gaining 0.2 percent to close at 32,285 yuan on the Shanghai Futures Exchange. The contract reached a record 38,920 yuan on Nov. 11.

China, the biggest buyer, ordered banks on Nov. 19 to set aside larger reserves for the second time in two weeks. The move to contain excess liquidity came after Premier Wen Jiabao held a Cabinet meeting earlier in the week and called for a crackdown on speculation in agricultural goods, saying price controls may be needed on “daily necessities.”

China Controls

China’s cabinet said last week it may impose temporary price controls after inflation gained the most since September 2008 and food prices climbed 10.1 percent.

Rubber in Tokyo has climbed 32 percent this year as heavy rain in Thailand, Indonesia and Malaysia, the top three growers, disrupted tapping and lowered production.

The cash price of natural rubber in Thailand, the largest producer and exporter, fell 1.1 percent to 131.25 baht ($4.36) per kilogram today as worries over China attempt to curb inflation and Ireland debt crisis prompted investors to reduce position in agricultural contracts, according tothe Rubber Research Institute of Thailand. The downside is limited because of supply shortage from major producers, it said. Thai price yesterday reached a record 132.75 baht per kilogram.

Ireland’s debt rating was lowered two steps by Standard & Poor’s, with a negative outlook, as the nation’s bailout of its banking system is set to escalate the government’s borrowing needs. Ireland is hammering out an aid package with the EU and the International Monetary Fund to rescue its banking system.

(Source: http://www.bloomberg.com/news/2010-11-24/rubber-futures-decline-on-china-s-credit-crackdown-north-korean-attack.html)

China Rubber Futures Fall After Crackdown on Bank Credit for Speculation

Natural rubber futures in Shanghai dropped by the daily 5 percent limit after the government said it would crack down on the use of bank credit to speculate in the agricultural market. Palm oil, sugar and rice also dropped.

The most-actively traded contract for May delivery fell to 32,220 yuan ($4,849) a metric ton on the Shanghai Futures Exchange. The contract has fallen more than 12 percent since Nov. 11, when China said its October consumer prices rose a more-than-forecast 4.4 percent from a year earlier, prompting the government to further tighten the monetary policy.

China will strictly crack down on the use of loan funds in speculation, hoarding and artificially inflating prices of agricultural products, the China Banking Regulatory Commission said on its website yesterday. China’s cabinet said last week it is also increasing grain supplies and may impose temporary price controls after inflation gained the most since September 2008 and food prices climbed 10.1 percent.

“The banking regulator became the latest government agency joining the crackdown on speculation in the agricultural market,” said Forrest Hu, manager at Shanghai Jinhuicheng International Trade Co.

Farm products prices have fallen in the past week since the government’s coordinated efforts to suppress speculation and increase supply by selling government stockpiles of sugar, pork and cooking oil.

Palm oil futures for September delivery on the Dalian Commodity Exchange fell 0.8 percent to 8,488 yuan a ton by the 11:30 a.m. local time break and have dropped almost 12 percent since Nov. 11. Sugar for delivery in the same month dropped 0.2 percent to 6,307 yuan and has fallen 13 percent in the same period.

Rubber also fell because of rising commercial inventories, Hu said. Natural rubber inventoriesrose for an eighth consecutive week to a seven-month high, gaining 705 tons to 60,996 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the exchange said on Nov. 19.

(Source: http://www.bloomberg.com/news/2010-11-23/china-rubber-futures-fall-after-crackdown-on-bank-credit-for-speculation.html)

Price reaction: Rubber high spurs extra planting

CAMBODIA’S rubber farmers are looking to expand plantations after the price of rubber hit more than US$4,000 per tonne this month.
Yesterday, April-delivery rubber on the Tokyo Commodity Exchange climbed as much as 2.1 percent to 375.3 yen per kilogram ($4,498 a tonne). The contract has climbed 13 percent this month as heavy rain in Thailand, Indonesia and Malaysia, the top three growers, disrupted tapping and lowered production.
Pouy Bun Eng, of Chamkar Leu district, in Kampong Cham province,  said she expanded her 50 hectare plantation by another seven hectares last month.
“I am happy because of the current high price,” she said.
While Kampong Cham province’s Tbong Khmum Family Rubber Association President Thy  Sambo said that he expected further increases in the price of resin this month. He warned, however that the crop took a long time to grow.
Ly Phalla, director of the Rubber Department at the Ministry of Agriculture, Forestry and Fisheries, said that high demand was pushing prices and the trend was set to continue.
Cambodia grows rubber on more 16.5000 hectares of land and produce more than 40,000 tonnes each year.

(Source: http://www.phnompenhpost.com/index.php/2010112344904/Business/price-reaction-rubber-high-spurs-extra-planting.html)

Tyre companies challenge Rubber Board data

Tyre companies have criticised the state-run Rubber Board for inflating rubber stock position and stated that the board's claim of sitting on stocks of more than 3 lakh tonne was merely 'on paper'.

The closing stock, as reported by the Rubber Board to the Association of Natural Rubber Producing Countries(ANRPC), has been pegged at 38% of the country's total natural rubber production. Even world's largest rubber producing countries including Thailand, Malaysia and Indonesia have closing stocks at mere 7%, 14% and 3%, respectively, of their production.

“At a time when rubber prices are ruling at an all-time high and the very availability is a concern, such tall stock claims are unrealistic,” Rajiv Budhraja, director-general, Automative Tyre Manufacturers Association (ATMA) told FE.

The association is planning to send a reminder to the Centre contesting the claims made by the Rubber Board. The tyre makers had earlier lobbied for allowing imports at nil duty

to bring down the cost of production.

Based on the recently issued ANRPC statistics, tyre industry has been keeping tab on the rubber flow to the market. ATMA points out that India’s closing rubber stocks have been rising. It currently stands at a significant 31% of the total natural rubber stock of major ANRPC, while India accounts for just 9% of the total production of ANRPC. ATMA said that closing stock of China- the world’s biggest rubber consumer- is only 6% of its total consumption. But India has one third of its total consumption stockpiled as stock....

(Source: http://www.financialexpress.com/news/tyre-companies-challenge-rubber-board-data/715022/0)

Rubber and Plastics Production Drive Growth in Industrial Automation Markets, Says ABI Research

 

Industrial robots have long been used to reduce companies' manufacturing, production and labor costs, eliminate dirty, dangerous and dull work tasks, and foster enhanced manufacturing production efficiency, quality and consistency. The auto industry has traditionally been the largest single user of industrial robotics, but even with that sector facing a downturn in production capacity over the next several years, ABI Research sees the market for industrial robotics expanding from $5.2 billion in new robots shipped in 2010 to $8.8 billion in shipments in 2015.
Larry Fisher, research director of NextGen, ABI Research's emerging technologies research incubator, says, “The short-term impact of the recession hurt robot sales in 2009, but manufacturers of all types have started spending strongly on robotic automation in 2010. Part of that surge is the result of delayed orders, but it's clear that the recession has forced many manufacturers to reassess their priorities and identify ways to reduce costs and improve efficiency.”
One result of that reassessment, Fisher says, is that “We see the rubber and plastics industry increasingly utilizing industrial automation to the extent that, by 2015, it will be the largest consumer of industrial robotics, on a revenue basis -- even larger than the auto industry.”
In addition, says Fisher, “Food and beverage handling and processing will see very strong growth in the use of robots, as manufacturers in the field realize the benefits of automation, from both the labor standpoint and the sanitary perspective.”
A new ABI Research Study, “Industrial Robotics: Welding, Assembly, Coating, Dispensing, Sealing, Machining, Material Handling, and other Industrial Robots and Components,” (http://www.abiresearch.com/research/1006057) finds that, while automotive manufacturing will shrink, on a unit basis, over the next several years, the increasing use of robots in such sectors as food handling and processing, clean technology and energy, pharmaceutical and general consumer goods production will drive growth in the industrial robotics sector through at least the middle of the coming decade, as manufacturers look to improve the speed, quality and reliability of production through automation.
It is part of the firm's Human-Machine Technology Research Service (http://www.abiresearch.com/products/service/Human-Machine_Technology_Research_Service), which also includes other Research Reports, ABI Insights, and analyst inquiry support.
ABI Research provides in-depth analysis and quantitative forecasting of trends in global connectivity and other emerging technologies. From offices in North America, Europe and Asia, ABI Research's worldwide team of experts advises thousands of decision makers through 30+ research and advisory services. Est. 1990.
(Source: http://www.benzinga.com/press-releases/10/11/b636743/rubber-and-plastics-production-drive-growth-in-industrial-automation-ma)

Tokyo rubber futures up

Tokyo  (november 23, 2010) : Key Tokyo rubber futures rose on Monday on improved technicals and supply concerns, but gains were limited due to uncertainty over possible future steps by China to curb inflation and ahead of a Japanese holiday. The key Tokyo Commodity exchange rubber contract for April delivery rose 2.1 yen or 0.6 percent to settle at 369.8 yen per kg.
The contract climbed as high as 375.9 yen on Friday, the highest since November 12. Japanese financial markets will be closed on Ưednesday for a National holiday. The most active rubber contract for may delivery on the Shanghai Futures market closed at 33,215 yuan ($5,002) per tonne, down 1,200 yuan from Friday's close of 34,415 yuan. volume stood at about 1.4 million lots.
Rubber production in Thailand, the world's biggest rubber producer and exporter, will fall by about 30,000 tonnes a year for the next six years because of damage from floods, an agriculture official said on Friday. Japan's crude rubber inventories totalled 7,552 tonnes as of November 10, down 2.8 percent from 10 days earlier, rubber trade association of Japan data showed on Monday.

(Source: http://www.brecorder.com/news/agriculture-and-allied/world/1126832:tokyo-rubber-futures-up.html?hl=rubber)

Rubber Advances for Third Day as Ireland Seeks Bank Bailout, Tight Supply

Rubber advanced for a third day as the yen weakened against the euro amid optimism that an agreement to rescue Ireland’s banks will prevent contagion across European debt markets, while supply remained tight. The cash price in Thailand climbed to a record.

April-delivery rubber on the Tokyo Commodity Exchange climbed as much as 2.1 percent to 375.3 yen per kilogram ($4,500 a metric ton) before settling at 369.8 yen. The most-active contract has climbed 13 percent this month as heavy rain in Thailand, Indonesia and Malaysia, the top three growers, disrupted tapping and lowered production.

“Worries over the debt situation in Europe have eased, improving sentiment and raising optimism that demand for the commodity will grow,” said Chaiwat Muenmee, analyst at DS Futures Co. “The low supply level is also supportive,” he said.

Irish Prime Minister Brian Cowen said on Nov. 21 in Dublin that he expects talks on the details of financial assistance from the European Union and the International Monetary Fund for Ireland to be completed in the “next few weeks.” Finance Minister Brian Lenihan said the loan will be less than 100 billion euros ($137 billion).

The yen depreciated to 114.85 against the euro, compared with 113.65 at the close of stock trading in Tokyo on Nov. 19. A weaker yen improves the appeal of yen-denominated contracts.

Cash-Price Record

Investors are still concerned about tight supplies from Thailand, Indonesia and Malaysia, said Hiroyuki Kikukawa, general manager of research at Tokyo-based IDO Securities Co.

The cash price in Thailand, the largest exporter, climbed to a record 132.75 baht ($4.44) per kilogram today as floods devastated trees, lowering production in the country’s south, according to the Rubber Research Institute of Thailand. The southern provinces account for 68 percent of the country’s total plantation area.

May-delivery rubber on the Shanghai Futures Exchange declined as much as 3.5 percent to 33,200 yuan ($5,000) a ton before closing at 33,215 yuan.

“The upside is limited on concerns over China’s measures to fight inflation,” Chaiwat at DS Futures said.

China, the biggest buyer, ordered banks on Nov. 19 to set aside larger reserves for the second time in two weeks. The latest move to contain excess liquidity came after Premier Wen Jiabaoheld a Cabinet meeting earlier in the week and called for a crackdown on speculation in agricultural goods, saying price controls may be needed on “daily necessities.”

China’s natural-rubber inventories rose for an eighth consecutive week to a seven-month high, gaining 705 tons to 60,996 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the exchange said Nov. 19.

(Source: http://www.bloomberg.com/news/2010-11-22/rubber-advances-for-third-day-as-ireland-seeks-bank-bailout-tight-supply.html)

NR Consumers May Have No Say In Physical NR Prices

There was no report on IRCo’s Daily Composite Price (DCP) on 17 November as some physical rubber markets in the region closed. However, IRCo’s technical indicators and market fundamental factors in general were still in positive territory during 17 - 18 November.

On the rubber futures front, Tokyo and Shanghai rubber futures tracked the falls in other commodity and stock markets on 17 November as investors were still concerned about Irish debts and a rise in Chinese inflation. A day after Tokyo rubber futures rebounded on the back of support mainly from a rebound in oil prices and a weakening Japanese yen, but the benchmark price for the most active month on Shanghai rubber futures settled slightly lower on the same day as investors feared that China’s central bank would increase interest rates and Beijing would control prices of necessities and commodities, including rubber fures in the country.

DESCRIPTION	17 NOV	18 NOV	CHANGE	% CHANGE	UNIT
IRCo's DCP	-	427.93	-	-	US cents/kg
TOCOM/RSS3 *
- Nov. 10	348.40	358.00	9.60	2.76%	Yen/kg
- Apr. 11	353.50	362.10	8.60	2.43%	Yen/kg
SHFE/RSS3 **	32,825	32,780	-45	-0.14%	Yuan/ton
AFET/RSS3
- Dec. 10	124.75	127.00	2.25	1.80%	THB/kg
- Jun 11	124.30	129.00	4.70	3.78%	THB/kg
RRIT ***
- RSS3	130.25	130.25	0.00	0.00%	THB/kg
- STR20	128.20	128.20	0.00	0.00%	THB/kg
SIR20 ****	-	428.00	-	-	US cents/kg
SMR20 ****	-	430.00	-	-	US cents/kg

Source: IRCo

Note: * Day session

** The highest daily trading volume was May. 2011

*** RRIT means Rubber Research Institute of Thailand

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

- The markets closed on a public holiday

Turning back to the physical front during the same period, physical rubber prices still settled mostly higher with strong demand from traders and tire makers, particularly China, the leading rubber consumer and importer. In the meantime, despite flooding in some parts of southern Thailand is receding, but most of natural rubber (NR) planted areas were fully damaged that will reduce NR supply in the first quarter of next year, which is a dry wintering season. NR consumers may have no say in physical NR prices when that time comes.

(Source: http://www.irco.biz/BlogMoreDetial.php?id=2712&ShowContent=news)

IRCo's WEEKLY MARKET SNAPSHOT 15 - 19 November 2010

IRCo's DCP stayed at 435.80 US cents/kg and continued to pull up its 14-day moving average further on Friday. At the same time, cash rubber prices in Thailand, Indonesia and Malaysia also moved in tandem with IRCo's DCP despite there were some hesitations on rubber futures concerning additional Chinese monetary tightening policies to tame inflation in the country whether they would increase cost of borrowing or not. However, rubber futures were mostly weighed on market fundamentals more than technical charts and external factors during the week.

Global stock and financial markets felt some kind of relief after the Irish government agreed to apply for an aid package from the European Union and the International Monetary Fund, and the People's Bank of China gave a clear word on Friday that it decided to raise additional 0.5 percentage points of money that banks must keep in the reserve requirement ratio from 29 November 2010 onwards in order to tame a two-year high of 4.4% inflation in October 2010. Additionally, Thai baht, Indonesian rupiah and Malaysian ringgit still extended their strength against the greenback on Friday while crude oil futures slid further.

U.S. Federal Reserve Ben Bernanke's remarks on Friday in Frankfurt showed his resolve to continue the U.S. Federal Reserve (Fed)'s second round of quantitative easing and indicated that the Fed wanted to depreciate the greenback further so as to increase export competitiveness. At the same time, the Fed also wanted to keep interest rates as low as possible in order to pull out the U.S. economy from stagnation and deflation. On Thursday, the New York Federal Reserve bought US$7.23 billion in Treasury notes while Treasurys fell as an upbeat U.S. manufacturing report and hopes of a bailout for debt-ridden Ireland cut haven buying, according to WSJ on Friday.

(Source: http://www.irco.biz/MarketWise.php?PHPSESSID=9c6633fdd55aad8cbb985caba3337f32)

Rubber prices may extend gains

Prices on the Malaysian rubber market is expected to extend its gains into next week amid tight raw material supplies.
"Bad weather conditions has been disrupting output and the market's direction next week will be determined by external leads mainly from the Tokyo Commodity Exchange and Shanghai Rubber Futures market," a dealer said.
Meanwhile, Thai rubber production is expected to fall by 30,000 tonnes, annually, for the next six years following damages caused by floods.
He said future steps taken by China to combat inflation and its effect on demand would take a toll on prices.

For the just-ended week, the Malaysian Rubber Board's official physical noon price for tyre-grade SMR 20 declined to 1,329.5 sen per kg from 1,342.0 sen last Friday, while latex-in-bulk increased to 874.5 sen per kg from 862 sen, previously.
The market was closed last Wednesday in conjunction with the Hari Raya Aidiladha celebration.
Meanwhile, the unofficial closing price for tyre-grade SMR 20 jumped to 1,337.5 sen per kg, from 1,328.0 sen last Friday, while latex-in-bulk rose to 878.0 sen per kg from 860.0 sen, previously. -- Bernama

(Source: http://www.btimes.com.my/Current_News/BTIMES/articles/20101120121320/Article/index_html)

Asian rubber: tyremakers keep buying despite high prices

BANGKOK  (November 21, 2010) : Major tyremakers are buying Asian rubber for nearby shipment despite high prices, although Chinese consumers are staying on the sidelines, reluctant to pay such rates, dealers said on Tuesday. Major tyremakers, including Bridgestone and Goodyear, are buying Indonesian SIR20 at 191.50 US cents/lb for prompt shipment, they said.
"Most tyremakers have shifted to buy Indonesian grade as it is generally considered the cheapest grade in the region," a Singapore-based trader said. Dealers said most consumers finally accepted the high prices as they realised they would not drop significantly to the levels of about $3.00 per kg seen at the same time last year.
Some traders were still buying Thai rubber, even though it was relatively expensive. "It seems like they realise there's no more cheap rubber," said a dealer in the southern Thai town of Hat Yai, the centre of the country's rubber trade.
Benchmark Thai RSS3 was bought at $4.27 per kg for January shipment, slightly below a record high of $4.40 per kg traded last week. Thai rubber grade as well as other Asian rubber grades changed hands at record levels last week, tracking Tokyo Futures rubber prices (TOCOM) which jumped to a 30-year high.
TOCOM rubber surged to a 30-year peak of 388.9 yen per kg, the highest since 1980, on the back of supply concerns after Thailand, the world's biggest producer, was hit by severe flooding that disrupted tapping and delayed shipments. However, dealers said Chinese tyremakers were staying out of the market, waiting to buy only when prices dropped. "They're waiting to buy when TOCOM prices drop, expecting physical prices to drop as well. But they still buy in dribs and drabs," one dealer said.
WEEK AHEAD The rainy season in Thailand's south is likely to end over the next couple of weeks and traders said they expect no more rain in December and prices should drop gradually.

(Source: http://www.brecorder.com/news/agriculture-and-allied/world/1126024:asian-rubber-tyremakers-keep-buying-despite-high-prices.html)

Rubber Futures Advance for Second Day on Tight Supply, U.S. Economic Data

Rubber climbed for a second day as U.S. jobless claims and manufacturing data boosted optimism that the economic recovery is gathering pace amid tight supply from major producers in Southeast Asia.

April-delivery rubber on the Tokyo Commodity Exchange surged as much as 3.8 percent to 375.9 yen per kilogram ($4,502 a metric ton) before settling at 367.7 yen. The most-active contract has gained 2.1 percent this week and climbed 33 percent this year as heavy rain in Thailand, Indonesia and Malaysia, the top three growers, has disrupted tapping and lowered production.

“Worries over the Irish debt problem have eased and U.S. economic data are supportive, raising optimism demand for the commodity will continue to grow,” Varut Rungkhum, analyst at commodity broker Agro Wealth Ltd., said by phone from Bangkok.

Ireland will probably seek a bailout from the European Union and International Monetary Fund worth “tens of billions” of euros to rescue its battered banks, central bank Governor Patrick Honohan told Irish state broadcaster RTE yesterday. Fewer workers than forecast filed for U.S. jobless benefits, while Philadelphia-area manufacturing topped estimates.

May-delivery rubber on the Shanghai Futures Exchange gained by the daily 5 percent limit to 34,415 yuan ($5,185) a ton and closed at that level. The contract has lost 3.8 percent this week, down from a record 38,920 yuan reached on Nov. 11, amid concern that China may take additional steps to curb inflation.

Tight Supply

“Supply remains tight,” Gu Jiong, an analyst at commodity broker Yutaka Shoji Co., said by phone from Tokyo. Rubber was also supported by rallies in other commodities and a weakening Japanese currency, he added.

The cash price in Thailand climbed to a record 132.25 baht ($4.42) per kilogram today as heavy rain and floods in the country’s south damaged trees, tightening supply, according to the Rubber Research Institute of Thailand.

Natural-rubber output in Thailand may decline by 10 percent to 870,000 tons in the fourth quarter, reducing total output this year by 5 percent to 3 million tons, according to an estimate by the Thai Rubber Association.

Applications for unemployment insurance payments rose by 2,000 to 439,000 in the week ended Nov. 13, Labor Department figures showed. Claims were projected to rise to 441,000, according to the median economist estimate in a Bloomberg survey. The total number of people collecting unemployment insurance dropped to the lowest level in two years, while those receiving extended payments climbed.

Manufacturing in the Philadelphia region expanded in November to the highest level this year. The Fed Bank of Philadelphia’s general economic index rose to 22.5 from 1 a month earlier. Readings greater than zero signal expansion. The gauge was forecast to increase to 5, according to the median estimate in a Bloomberg News survey.

(Source: http://www.bloomberg.com/news/2010-11-19/rubber-futures-advance-for-second-day-on-tight-supply-u-s-economic-data.html)

Rubber rallies 3.7 pct on supply concerns

Rubber futures rallied on Tokyo Commodity Exchange (TOCOM) on Friday, on expectations Chinamay top off its stocks and on continued supply concerns.

Better-than-expected US data released overnight also helped improve the sentiment for commodities, traders said.

As of 10:30 GMT, the most traded April 2011 contract was at 371.1 yen ($4.45) per kilogram, up 2.7 percent on the day, and 3.3 percent higher from last week's close.

Supplies from Thailand, the world's largest producer of natural rubber, are also reduced by heavy rains and floods affecting the major yielding areas of the country.

Spot price of ribbed smoked sheet (RSS) -3 grade rubber rose by 1.17 baht to 124.30 baht ($4.14) inThailand's Songkhla market on Friday.

Production in India is also severely hit by bad weather in Kerala, a southern state of the country which contributes more than 90 percent of India's total output. India is no.4 producer of the commodity in the world.

US jobless claims rose by 2,000 to 439,000 in the week ended Nov. 13, less than market consensus of 441,000, Labor Department figures showed. The total number of people collecting unemployment insurance dropped to the lowest level in two years, while those receiving extended payments climbed.

Manufacturing in the Philadelphia region expanded in November to the highest level this year. The Fed Bank of Philadelphia's general economic index rose to 22.5 from October, sharply higher than market forecast of 5. Readings above zero signal expansion.

(Source: http://www.ibtimes.com/articles/83785/20101119/rubber-tocom-tokyo-futures-april-contract-thailand-india-kerala-us-data-philadelphia-jobless-claims.htm)

Synthetic rubber use up 26.6% in April-July

Reasons: High natural rubber prices, low stock.

The steep rise in natural rubber (NR) prices has resulted in a sharp increase in the consumption of synthetic rubber (SR) in the country. The consumption of SR was up 26.6 per cent during April-July period of the current fiscal year, compared to 4.9 per cent growth in the same period of 2009-10, latest data by the Rubber Board showed.In volume terms, total SR consumption increased to 132,925 tonnes in April-July as against 104,955 tonnes in the same period of the last financial year.

There has been a deviation in the consumption pattern of rubber-based industries in India, especially by tyre manufacturers. A 32.6 per cent increase was recorded in the consumption of SR by tyre companies during the period at 93,503 tonnes against 70,513 tonnes in the same period last year. Though the consumption of NR by tyre producers during the period increased only 5.1 per cent.

With NR prices almost doubling in the last 15 months and poor stock position led to a supply crunch which forced the industry to depend on SR.

More SR was routed to India through imports as domestic production was only 27 per cent of the total requirement. The price advantage of imported SR compared to NR also caused the increase in its consumption.

Certain segments of tyres like car radials especially meant for export purpose need more SR which is preferable in the overseas markets, according to experts. Traditionally Western countries use SR mainly for production of tyres while Asian countries largely use NR.

The consumption ratio of NR and SR in India was 76:24 few years back, which is now 74:26 in favour of SR. There was an improvement in the domestic production of SR. In April-July period, production increased 2.2 per cent while there was negative growth of 4.4 per cent in the same period of the last financial year. Total SR production increased to 35,144 tonnes as against 34,392 tonnes in April -July of 2009-10.

(Source: http://www.business-standard.com/india/news/synthetic-rubber-use266-in-april-july/415365/)

China tightening to weigh on commodities

(Reuters) - Steps to curb inflation in China could further dampen a sharp rally in commodity prices this year.

Speculation that a rate move could be just around the corner grew after an official Chinese newspaper suggested that Friday could be a convenient time to raise rates before banks settle accumulated interest on the 20th day of the month, and Chinese Premier Wen Jiabao emphasized that his government is preparing steps to tame price rises.

With inflation running at a 25-month high, raising interest rates or taking measures to cap domestic prices could constrain commodity demand or drain liquidity from markets.

The following scenarios look at what might happen and the potential impact on China's commodity markets.

CHINA RAISES INTEREST RATES AGAIN

The People's Bank of China (PBOC) surprised the world with its October interest rate hike, the first since December 2007. But it did not close the gap between interest rates and inflation and it did not stop a rally in China's commodity futures markets.

Most investors are now asking "when" rather than "whether" interest rates will rise again.

But China runs a risk if it presses the trigger too soon: so far, China has front-loaded its monetary tightening, striking before the market expected it to do so.

Having played one ace, the PBOC may be wary of using another before it needs to, in case speculators flock back to the market, sensing a lull.

Beneath the froth of liquidity, China's fundamental demand for most commodities is expected to stay strong, which would help support underlying prices.

"The government realises they have massive demand that will keep prices under tension. There must be a heightened level of concern after CPI data," ANZ's senior commodity analyst, Mark Pervan, said.

The government has said it aims to increase supplies of commodities and to crack down on hoarding, sending a message that it aims to prevent speculators from exploiting the situation.

Under a tightening scenario, analysts expect markets like rubber and zinc, which have seen significant inflows of speculative money, to fall hard, while markets like copper, which have a more solid fundamentals underpinning them, may hold up better.

Foodstuffs are likely to be hardest hit, highlighting Beijing's focus on consumer inflation.

In recent months, analysts have blamed excess liquidity for pushing up commodity prices across the board, but especially cotton , sugar and rubber .

Rising prices for agricultural commodities such as soybeans , corn and wheat have also prompted farmers to hold onto their crops after the harvest, restricting supply and giving prices another upward push.

The feed-through into food prices, which make up one third the inflation basket, and the risk of civil unrest is likely to be a much bigger concern for policy makers than the danger of boom and bust caused by speculative funds in the market.

CHINA RAISES RRR AGAIN

The PBOC has already tightened banks' balance sheets four times this year by raising their required reserve ratios (RRR). This makes it harder for them to lend but doesn't touch other sources of money supply, such as the revenues from China's trade surplus or the savings that ordinary citizens have squirreled away.

The increases in reserve ratios have had little impact on commodity prices this year after the initial shiver following each tightening move. Many investors have chosen to see such measures as shoring up economic stability rather than worrying about the short-term fall in liquidity and the potential impact on demand.

But even if raising reserve rations has had little impact on commodity prrices, it sends a signal to the market that the government is intent on draining excess liquidity whenever possible.

CHINA DOES NO MORE TIGHTENING BUT KEEPS THE FEAR ALIVE

China's central bank may not need to actually tighten monetary policy. Just talk of a rate rise may be enough to chase off speculators -- for now.

The PBOC has already flipped most economists' forecasts. Before its latest hike on Oct 19, most economists were not expecting any movement on interest rates until 2011. Now many expect another move to come before the end of 2010.

Having created that buzz, the PBOC might even decide to keep its powder dry. Just talk of an impending interest rate rise sent commodity futures tumbling to their daily limits on Nov 12.

Although the rumour proved unfounded, many futures contracts have fallen since then, making it a bigger success in turning around the market than the actual interest rate rise on Oct 19, which barely put a dent in many commodity prices before they continued their upward march.

In the longer term, chasing speculative money out of the agricultural commodity markets could also help bring down food prices, but it risks attracting complaints about the freedom of China's financial markets, a sensitive topic for the government.

(Additional reporting by Nick Trevethan in Singapore)

(Source: http://in.reuters.com/article/idINIndia-53019120101119)