Tyre makers request cap on prices of rubber futures

Reeling under steep ascent in birth rubber prices, tyre manufacturers have stepped up make on the government and commodities watchdog to hamper the estimate stretch for rubber futures.
In a written representation before FMC last week, tyre activity has cited undying shortage of rubber to cause in restrictive actions and moderate the prices in both setting and futures promote.
Tyre trade has cited setting and hope markets data during October and November 2010 to prop its squabble for moderating rubber prices. It sharp to rubber futures prices at NMCE, the largest Indian barter trading in rubber futures, which ruled about Rs 40 per kg over inclusive charge.
All India Tyre Manufacturers Association (Atma) has sought reduction daily trade circuits to two percent — one percent up or down — from the prevailing eight percent crew permitted at most exchanges by FMC.
“We do not yearning the Futures Trade becomes breeding ground for manipulators who bequeath genuine stakeholders in reel and distort normalcy of the full trade. The futures trade unfortunately profit no rubber stakeholder, so we have demanded its suspension temporarily. However, if FMC thinks that there is plus in continuing the trade, then we would tender curbing intra-day estimate limits to one percent, so that the scale of manipulation is controlled and restricted,” executive common of Atma Rajiv Budhraja told Financial Chronicle.
Atma has also debunked the reasons attributed by FMC for steep scramble in rubber prices during November 2010. During October 2010, about the same time when rubber prices touched document high over junior deliver disruptions caused by Kerala rains, Rubber Board estimates quoted by ATMA show the relaxed rubber horses was also at the details high of 2.48 lakh tones.
In the same month, rubber output in the country uneven up 4.5 percent as against a poorer three percent walk in consumption. Questioning transparency on fitting heart for abnormal outlay hikes in hope deliveries of likely rubber, the ATMA director general wrote in his memo: “All this signify that prices should have fallen drastically as there was significant abandon in want, production was in leftover of consumption, and gigantic dull was at hand just before commencement of pike production season.”
FMC had told tyre industry body in November 2010 that Kerala frost rains in previous month disrupted yield and ordinary rubber materials, causing the abnormal charge walk.
“However, production disruptions etc. in October 2010, these are not abnormal. Even Rubber Boarded estimated the month’s production as 82,000 tones that was about 6,000 tones fewer than last year,” ATMA said refuting FMC’s behold on rubber rate hike.
Citing instances of artificial value hikes caused by futures trade in rubber, the tyre industry body has cited that June-July routine positions of NMCE were even more grave than it was in October 2010. The switch’s horde had deceased to near zilch, and titanic make on expiring treaty relief was resultant in prices zooming up.
On July 14 & 15, 2010, natural rubbers futures prices traded through NMCE had risen sharply to Rs 19,300 while worldwide prices were around Rs 15,500 per tone. Nevertheless in October 2010, NMCE stocks were far more than open attract even before expiry of the same month tighten.
Following the tyre industry representation, FMC officials inspected NMCE’s supply centers across the country. The promote watchdog has described these checks mandated under Section 12 of the Forward Contract Regulation Act (FCRA) as “routine”. Earlier, there rumor of FMC officials pillaging several offices and establishments of NMCE.
“Our inspections are done to deter someone from not adhering to lay down souk principles. If anything incriminating is found, the regulator’s job is to start action to upgrade adherence,” BC Khatua, FMC chair said.
Khatua refused to statement on ATMA representation. He said that inspection reports were likely to come up before FMC timber in next few weeks. Meanwhile, NMCE on its part has claimed that tome traded by it and stirred from Kerala to Punjab by its advocate steady Neptune Overseas Ltd were just about 200 tones in two being.

(Source: http://www.mydigitalfc.com/economy/tyre-makers-seek-cap-prices-rubber-futures-608)