Friday, March 25, 2011

US auto sales favors rubber, bad news from China-Japan

CALIFORNIA (Commodity Online): March sales of new vehicles in U.S. has demonstrated stability through the first three weeks of the month, continuing a trend of increasing year after year double-digit monthly, according to JD Power and Associates, which collects real time data transaction of more than 8,900 retail franchises throughout the United States . The automotive industry is a major consumer of rubber in the manufacture of tires and therefore gives strong support to natural rubber prices worldwide.
However, the automobile sector in China and Japan are experiencing a crisis created by the devastating earthquake that has forced the closure of auto plants in Japan and China. The disruption of global supply chain following the earthquake and tsunami in Japan has sent shock waves through the auto manufacturers in China, especially companies that are funded by the Japanese automakers, reported Xinhua. China has become the largest market for automobiles, although the parts sources and technologies for the production of other countries.
Toyota, the largest automaker in the world has declared that it would extend the closure of eleven of its factories until the end of the week. Honda also remain closed, while Nissan has reported the partial resumption of operations.
Meanwhile, auto companies jointly between Japan and China with production bases in China are affected by disruptions in the supply of parts and components after the earthquake. Some local Chinese car makers also could face tough times as a source of raw materials from Japan that production stopped in late March.
In the U.S. March new vehicle sales at retail are expected to come in at 991,900 units, representing a seasonally adjusted annual rate (SAAR) of 10.9 million units. This level could lead to the type of sale for the first quarter of 2011 to 10. 7 million units, slightly above the annual estimate of 10.6 million units. Commercial transactions are the most accurate measure of actual consumer demand for new vehicles behind.
"Retail sales in March, showcases the strength and stay in line with expectations, despite rising gas prices and falling inventory levels," said Jeff Schuster, executive director of global forecasting JD Power and Associates. "In fact, retail sales in March could be benefiting from the uncertainty regarding the inventory levels, as consumers flock to the dealers to ensure their choice of vehicle as availability declines."
The changes in the mix retail segment are becoming evident, as the sub-compact car is expected to be up to more than 0.5 percentage points in March to 3.8 percent from 3.2 percent in February. The percentage of compact cars also expected to increase, up 20.4 percent in March from 17 percent in February.
Meanwhile, prices have fallen TOCOM rubber on Friday after gaining steadily in the week. China's monetary tightening has also contributed to the ills of the demand for rubber. The contract for August delivery on TOCOM fell by 3.9% despite a 5 percent earned this week's meeting of ¥ 446.9 on 23 March.
If buying from China will not increase due to the crisis in the automotive, rubber could witness some weakness in early April, analysts said. Meanwhile, Bloomberg quoted analysts of Nanhua Futures Co. said rubber supplies are about to begin in Hainan province of China, the largest producer in the country, playing begins in late March. Meanwhile, Indian car sales data accumulated April-February 2011 shows the growth of domestic sales of 26.92 per cent over the same period last year. In February 2011, compared with February 2010, domestic sales grew by 21.32 percent, according to the Society of Automobile Manufacturers India.
Passenger car segment grew to 29. 85 per cent during April-February 2011 over the same period last year. Passenger Cars grew by 30.34 percent, commercial vehicles grew by 19.69 percent and Multi-purpose vehicles grew 43.28 percent in this period. February 2011 sales figures showed domestic passenger growth of only 22.63 percent over the same month last year. However, in absolute numbers, this segment recorded higher sales ever. Total passenger car sales figures for February 2011 compared to February 2010 shows a growth rate stood at 20.88 percent.
As vehicle sales in the U.S. in 2011 so far have been stronger than expected, the outlook for 2011 is optimistic. Because of this strength in retail sales, JD Power has increased its forecast of 2011 to 10.6 million units (10.5 million units) for retail sales, up 16 percent from 2010. The outlook for vehicle sales remains at 13 million units, which is 13 percent from 2010, JD Power and Associates, said in an analysis.
"The economy is not the main variable that could affect the year's total sales volume, as the industry is struggling with gas prices at their highest level in over two years, and the possibility of a shortage widespread availability of vehicle, "said John Humphrey, senior vice president of automotive operations at JD Power and Associates. "Although the risks are still evident, the status of the industry is much stronger and able to overcome external shocks better than they could before the recession."

(Source: http://www.commodityonline.com/news/US-auto-sales-favors-rubber-bad-news-from-China-Japan-37574-3-1.html)

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