ASSOCOMAPLAST

Italy's rubber and plastics industry still down in 2009 / Exports shift towards Latin America and Asia / Giorgio Colombo confirmed as new chairman

Italy’s market for plastics and rubber machinery, equipment and moulds is still reeling under the pervasive economic downturn, with production down EUR 900m year-on-year in 2009, at EUR 3,300m. Detailed figures for the country’s plastics and rubber industries were presented at a recent general assembly meeting of the Italian plastics and rubber processing machinery and mould manufacturers’ association Assocomaplast (Milan; www.assocomaplast.org). In 2007, the industry trade balance still had EUR 2,118m in surplus. By 2009, that figure had dropped to EUR 1,919m. Imports fell to EUR 472m (2008: EUR 607m), while exports took a tumble to EUR 1,853m last year (EUR 2,523m).

While exports to Europe, the Middle East, NAFTA and Oceania were down, Assocomaplast’s data actually shows a year-on-year increase for goods shipped to the Far East, South and Central America, as well as Africa. A similar shift, especially toward the east, was also observed by the German plastics and rubber machinery association KuG (Frankfurt; www.kug.vdma.org) – see PIEWeb of 04.06.2010.

All is not gloom, however. Some 70% of respondents to a recent Assocomaplast survey reported that their order book situation in May 2010 trumped that of the previous year, with 45% of those polled even testifying to growth over April 2010. When queried about how they saw business develop in H1 2010 as compared to H1 2009, 45% of respondents said business was up, while 46% reported stability.

During its 9 June meeting, the Assocomaplast general assembly also gave its stamp of approval to the earlier appointment of Giorgio Colombo as new chairman. Colombo had been unanimously proposed by Assocomaplast’s committee in May – see PIEWeb of 14.05.2010. Other personnel changes include the appointment of Alessandro Grassi as vice-chairman and Mario Maggiani’s nomination to the post of secretary general.

(plasteurope.com)

Asian physical rubber prices - June 23

BANGKOK, June 23 - Asian physical rubber prices were slightly lower on Wednesday and were likely to drop gradually over the next few weeks because of rising supplies in major producing countries, dealers said.

Rubber supplies are due to rise in July as rain in parts of Thailand and Malaysia, the biggest and third-biggest producers respectively, is likely to ease, allowing farmers to tap more latex, they said.

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

PRICES OF ASIAN PHYSICAL RUBBER COMPARED WITH JUNE 22

Grade Price Change

Thai RSS3 (Aug) $3.60 unchanged

Thai STR20 (Aug) $3.00 -$0.05

Malaysia SMR20 (Aug) $2.85 -$0.05

Indonesia SIR20 (Aug) $1.33/lb -$0.02

Thai USS3 112 baht/kg unchanged

Thai 60-percent latex (drum/ Aug) $2,200 unchanged

Thai 60-percent latex (bulk/ Aug) $2,100 unchanged

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

(news.alibaba.com)

Toyota Halts Output at China Plant After Supplier Hit by Strike

Toyota Motor Corp. and Honda Motor Co. halted production at factories in southern China after two suppliers’ plants were closed by strikes, extending disputes at parts makers in the nation to at least eight in the past month.

Toyota’s factory in Guangzhou, Guangdong province remains closed today after output was suspended yesterday morning because of a strike at a Denso Corp. venture, Hitoshi Yokoyama, a Beijing-based spokesman for the carmaker, said. Honda closed two plants in Guangzhou after a walkout at NHK Spring Co., said Natsuno Asanuma, a Tokyo-based spokeswoman at Honda.

Strikes have spread since Honda agreed last month to raise wages at a parts supplier by 24 percent to end a stoppage that halted its production in the world’s largest auto market. The unrest at foreign-owned factories in China reflects a shrinking supply of low-cost labor in the nation.

“This illustrates the growing pains the Chinese auto industry is going through,” said Ashvin Chotai, London-based managing director of Intelligence Automotive Asia Ltd., an industry consultant. “It’s facing the same labor problems seen earlier in developed nations. Over the long term, manufacturers need to have a range of contingency plans,” such as getting the same parts from multiple suppliers, he said.

BMW’s ‘Dispute’

Employees at a BMW car dealership in the city of Dalian, Liaoning province, went on strike to protest unpaid bonuses, the 21st Century Business Herald reported today. Duan Yi, a spokeswoman for Bayerische Motoren Werke AG in Beijing, said there was a “dispute” between workers and management and that said she couldn’t confirm whether employees were striking.

Toyota fell 1.7 percent to close at 3,220 yen in Tokyo trading, while Denso dropped 1.2 percent. Honda lost 1.5 percent and NHK Spring declined 1.4 percent.

Toyota supplier Denso Guangzhou Nansha Co., a joint venture in Guangzhou, halted production yesterday as workers walked out demanding higher wages and improved benefits, Denso spokesman Toshihiro Nishiwaki said by phone yesterday from Aichi, Japan.

The strike and negotiations are continuing today, company spokesman Goro Kanemasu said. He declined to elaborate on workers’ demands and said he wasn’t aware of disruptions at any other Denso facilities.

Denso, Japan’s largest car-parts manufacturer, is about 23 percent owned by Toyota, according to data compiled by Bloomberg.

Nissan, Foxconn

Toyota, the world’s largest carmaker, builds Camry sedans, Highlander sport-utility vehicles and Yaris compact cars at the Guangzhou factory.

The strike at the NHK Spring plant that supplies Honda began late yesterday, said Hiroaki Saito, a spokesman for the Yokohama-based parts maker. The factory, which makes coil springs and stabilizers for cars, is closed today and negotiations are ongoing, he said.

Nissan Motor Co., Japan’s third-largest carmaker, has yet to report any disruptions due to the spreading strikes in China.

“The events are not making us change our plans” in terms of inventory management or automation, Carlos Ghosn, chief executive officer of the Yokohama-based company, said after an annual shareholder meeting today.

Worker unrest has forced Japanese carmakers and other foreign manufacturers including Taiwan’s Foxconn Technology Group to spend more on labor. Suppliers to Toyota and Honda agreed to raise wages as at least six previous strikes broke out at their Chinese factories in the past month.

Toyoda Gosei

Employees at Toyota affiliate Toyoda Gosei Co. ended a strike on June 19. Workers at another Toyota supplier, Tianjin Star Light Rubber and Plastic Co., walked out briefly on June 15 before the dispute was settled when the company offered a pay increase.

About 300 workers are involved in the strike at Denso’s Guangzhou venture, Beijing-based spokesman Shen Meihua said yesterday. The plant, which makes fuel injection systems, employs about 1,100 people, according to a company report.

Toyota’s Yokoyama said the automaker’s factory in Tianjin, northern China, is operating normally. The carmaker closed the plant on June 18 because of the strike at Toyoda Gosei.

Honda agreed last month to raise pay 24 percent for workers at a parts plant in Foshan, Guangdong, after a strike shut down all four of its China car factories. Another Honda parts supplier in Foshan was shut June 7 to June 10 by a walkout.

More than 20 Chinese provinces and cities, including the manufacturing hub Shenzhen, raised minimum wages this year to help companies recruit workers and to boost domestic consumption, the city government said this month.

Long-Term Benefit

Higher investment and improved wages in western China are deterring workers from migrating, pushing up pay in more industrialized regions like Guangdong in the south, said David Abrahamson, project manager at the China Center for Labor and Environment.

Workers say the pay increases are necessary to help keep pace with the rising cost of living in China. Inflation accelerated to an annual pace of 3.1 percent in May, the biggest increase in 19 months. Property prices in May jumped 12.4 percent across 70 cities from a year earlier, the government said on June 10.

Increasing wages may help automakers in the long run by boosting demand for cars in China, said Andrew Phillips, an analyst in Tokyo at BNP Paribas SA. Carmakers are producing in China to meet domestic demand, not because of low costs, he said.

“Wages as a percentage of revenue are tiny,” Phillips said. “The concern is more loss of production.”

(bloomberg.com)

BP Spill May Be Less Than Doomsayers Think: Commentary by Tadeusz Patzek

Two months have passed since the blowout of the BP Plc exploratory Macondo well in the Gulf of Mexico. Much more is now known about a string of fateful decisions taken in the course of drilling this well.

Individually, none of BP’s decisions would have caused the blowout, but their confluence led almost inevitably to the largest oil-related tragedy in U.S. history. Eleven people have died, a whole coastal region of the Gulf of Mexico has been devastated and it is uncertain that BP will survive the ordeal.

There is some good news, however: Most of the oil and gas spewing from the failed well is now being captured by BP engineers. Here is why.

On June 17, video feeds showed oil and gas to be still escaping from the containment hat attached to the failed blowout preventer (BOP) on top of the well. The brown part of the plume consists of oil droplets, while the white bubbles are gas encapsulated in hydrate ice skins. These ice-gas bubbles eventually dissolve in seawater, thus they never reach the ocean surface.

I have watched the BP video feeds for weeks. The plume currently overflowing the top hat is significantly smaller and less violent than the initial oil and gas plume emanating from the broken riser. This suggests that a large portion of the well flow is now being produced in a controlled fashion.

On June 16, BP finally managed to connect the choke and kill lines below the BOP to a surface collection system onboard the Q4000 vessel. Both production lines (the top-hat riser and the choke-and-kill line riser) are capable of collecting around 25,000 barrels of oil and 30 million standard cubic feet of gas daily. Correcting volumes for the pressure difference between the sea bottom and the surface, the total flow of oil and gas through the BOP should be about 35,000 barrels a day, not 60,000 barrels a day as some claim.

Increased Flow

There are two reasons why the oil flow rate from the failed BP well may have increased from the initial 9,000 to 22,000 barrels a day, the amount estimated to have been leaking in May. First, the partially closed rams and rubber rings functioning as flow barriers in the BOP may have been eroded by oil and gas, and perhaps sand. Second, “wormholes,” or meandering flow tubes that connect the reservoir and the well, may have formed.

“Wormholes” are created when sandstone crumbles and washes away because either the oil and gas flow rate is high, or the reservoir oil is highly viscous, like cold molasses. The combined effect of rock and well erosion might have increased oil flow from about 20,000 to 30,000 barrels a day.

Soil in the Rain

The physics of this phenomenon, akin to washing soil away by rain, is nicely described on The Oil Drum website. Gas is an additional 50 percent of the total flow and is often conflated with the oil flow. As I indicated at the beginning, gas dissolves in the seawater at depth and doesn’t reach the ocean surface.

For the sake of perspective, consider the BP Thunder Horse platform, the world’s largest semisubmersible facility. Prior to the disastrous spill it was also the most productive platform in the Gulf of Mexico, located in water that’s about 6,050 feet (1,844 meters) deep. As of March 20, 2009, daily production at this platform was approximately 260,000 barrels of oil and 210.5 million standard cubic feet of natural gas a day from seven wells, an average of 37,000 barrels of oil and 30 million standard cubic feet of gas per well.

The former Minerals Management Service reports that the majority of ultra-deepwater wells in the Gulf of Mexico produce around 20,000 barrels of oil a day, with the best well in the entire region producing 41,000 barrels a day.

Failure Not Likely

Unless there has been a complete failure of the central 7- inch production casing -- which I don’t believe has occurred -- then no reason exists to believe the failed Macondo well is producing 60,000 barrels of oil a day.

Based on the available information and calculations, it is highly probable that the failed BP well is producing oil at a rate that is closer to 20,000 or 30,000 barrels of oil a day. If BP is currently collecting 25,000 barrels a day, then only some 5,000 barrels of oil are being spilled in the Gulf waters.

Based on the evidence presented thus far, it seems quite unlikely that 60,000 to 150,000 barrels of oil a day will ever flow from the Macondo well. By controlling the spill rate, BP has gained the breathing room required to successfully complete the bottom kill using the relief wells. I anxiously await the good news that the Macondo well has ceased flowing.

(Tadeusz W. Patzek is chairman of the petroleum and geosystems engineering department at the University of Texas- Austin. The opinions expressed are his own.)

(bloomberg.com)

Rice Production in Thailand May Decline 10% Next Season on Drought, Flood - Bloomberg

Production of Thailand’s main rice crop may decline by at least 10 percent in the season starting October as delayed rains followed by possible flooding may hurt crops, according to the Thai Rice Mills Association.

“Production of the main crop may be damaged,” Banjong Tungjitwattanakun, the association’s vice president, said in a phone interview. Thailand, the largest exporter, usually produces about 23 million metric tons of unmilled rice from the main crop, accounting for about 75 percent of its output.

The Thai government advised farmers to postpone planting to the end of July because of delayed rains and warned of possible crop damage after the Meteorological Department said there may by heavy rains and flooding in September and October.

This is the second time this year the authority has advised farmers to delay planting as the El Nino weather pattern reduced rainfall. The main rice crop is usually planted in May and harvesting begins in October.

Falling supplies may drive the price of Thai 100 percent grade-B white rice, the benchmark for Asia, to $500 a ton by the end of the year, Banjong said.

Thai rice prices have recovered from a two-year low of $469 a ton on June 9 as a strengthening local currency makes exports more expensive. The price of 100 percent grade-B white rice gained 1.7 percent today to $479 a ton. That’s near the lowest since February 2008, when the price averaged $466.25, according to data from the Thai Rice Exporters Association’s website.

Rough rice futures traded in Chicago have tumbled 27 percent this year. The September-delivery contract lost 0.2 percent to $10.82 per 100 pounds at 4:02 p.m. in Singapore.

‘Double Impact’

“Farmers will suffer from the double impact of drought and flood,” Banjong said. “Drought already damaged 38 percent of the current crop, lowering output to 5 million tons from 8 million estimated earlier.”

Drought has damaged crops in 20 of Thailand’s 76 provinces, mostly in the north and northeast, which are major planting areas for rice and sugar. Drought linked to the El Nino weather pattern has affected a swathe of Asia, damaging crops from southern China to Southeast Asia.

“In the next season, total production may decline from a normal level of around 31 million tons,” said Banjong. The extent of the impact has yet to be assessed, he said.

Production may be even lower than estimated as some farmers will likely shift to crops that yield better returns, such as sugar cane, cassava, corn and rubber, as rice prices decline, Banjong said.

(bloomberg.com)

Toyota Affiliate Denso Says Chinese Parts Factory Is Shuttered by Strike

Toyota Motor Corp. was hit by at least the third strike among its suppliers in China as widening labor unrest continued to disrupt Japanese manufacturers’ output in the world’s biggest auto market.

Workers at a venture of Denso Corp., Japan’s biggest auto- parts maker, walked out yesterday, shutting the plant in Guangzhou, Guangdong province, Toshihiro Nishiwaki, a spokesman for the Aichi, Japan-based company, said by phone today. The parts maker is in talks with the employees, who are demanding higher pay and improved benefits, he said.

Labor unrest in China is spreading to Toyota after employees at suppliers to Honda Motor Co. agreed to return to work with promises of higher pay. Toyota closed a factory in Tianjin on June 18 because of a strike at supplier Toyoda Gosei Co. in the northern Chinese city, said Mieko Iwasaki, a spokeswoman for the carmaker.

“So far, at this stage, the strikes are occurring at Japanese suppliers,” which pay about half the wage level of European and American companies, said Lin Huaibin, an analyst in Shanghai at consulting company IHS Global Insight. “We could see unrest spread to Korean and Taiwanese makers.”

Denso is about 23 percent owned by Toyota, the world’s largest carmaker, according to data compiled by Bloomberg.

Toyota said it’s unclear whether the strike will impact production at the carmaker’s ventures in Guangzhou and Tianjin, said Niu Yu, a Beijing-based spokesman for the carmaker. Shen Meihua, Denso’s Beijing-based spokeswoman, wasn’t immediately available for comment.

Six Strikes

Toyota fell 0.6 percent to 3,275 yen as of 1:52 p.m. in Tokyo trading, while Denso dropped 1.4 percent.

Denso Guangzhou Nansha Co., the joint venture in Guangzhou, manufactures and supplies fuel injection systems for customers including Toyota. The venture employs about 1,100 workers, according to a Denso company report.

Suppliers to Toyota and Honda agreed to raise wages as at least six previous strikes broke out at their Chinese factories in the past month, disrupting their production in the world’s largest auto market.

Toyota affiliate Toyoda Gosei Co. ended a strike on June 19. Workers at another Toyota supplier, Tianjin Star Light Rubber and Plastic Co., also walked out briefly on June 15 before the dispute was settled when the company offered a pay increase.

Pay Increases

Honda agreed last month to raise pay 24 percent for workers at a parts plant in Foshan after a strike shut down all four of its China car factories. Another Honda parts supplier in Foshan, Guangdong, was shut June 7 to June 10 by a walkout.

More than 20 Chinese provinces and cities, including the manufacturing hub Shenzhen, raised minimum wages this year to help companies recruit workers and to boost domestic consumption, the city government said this month.

Higher investment and improved wages in western China are deterring workers from migrating, pushing up pay in more industrialized regions like Guangdong in the south, said David Abrahamson, project manager at the China Center for Labor and Environment.

Workers say the pay increases are necessary to help keep pace with the rising cost of living in the world’s most populous nation. Inflation accelerated to an annual pace of 3.1 percent in May, the biggest increase in 19 months. Property prices in May jumped 12.4 percent across 70 cities from a year earlier, the government said June 10.

(bloomberg.com)

Rubber Declines as Crude Oil Retreats, Optimism On Chinese Currency Fades

Rubber dropped for the third time in four days as the price of crude oil declined and optimism faded over China’s demand.

Futures in Tokyo declined as much as 2.1 percent after climbing 3 percent yesterday, nearing a two-week high of 286.7 yen reached on June 16. Prices gained after China signaled it will unshackle the yuan’s fixed rate to the dollar, stoking speculation that the world’s largest consumer may boost imports.

“The good news from the yuan flexibility has faded as it lacked support from Wall Street,” said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co.

Rubber for November-delivery dropped as much as 5.8 yen to 276.8 yen per kilogram ($3,039 a metric ton) before trading at 278.5 yen on the Tokyo Commodity Exchange at 11:45 a.m.

The November-delivery contract on the Shanghai Futures Exchange declined 0.7 percent to 21,535 yuan ($3,162) a ton. Yesterday, the price climbed to 22,200 yuan, the highest level since June 3.

China, the world’s largest auto market, is the biggest user of natural rubber. The nation may boost gross imports of the raw material to 1.68 million tons this year from 1.59 million in 2009, according to a May report from the Association of Natural Rubber Producing Countries.

Oil Falls

“The market is in correction mode after sharp gains yesterday,” said Kazunori Kokubo, general manager for International Business Department at Yutaka Shoji Ltd. “Oil is also down, driving the rubber market lower.”

Crude oil declined for the first time in three days as optimism faded that China’s plan to add more flexibility in the yuan’s fixed exchange rate would strengthen the global economic recovery. A drop in crude oil cuts the appetite for rubber, used to make tires.

Increasing supply from Thailand added pressure to the rubber market, Chaiwat said from Bangkok. An average of 200 tons of ribbed smoked sheet RSS-3 rubber a day is available in the market this month, compared with slightly more than 100 tons a day in May, he said.

Global rubber output may total 9.7 million to 10.2 million tons this year as drought and heavy rainfall in key producing countries including Thailand and Indonesia damage supply, Stephen Evans, the secretary-general of the International Rubber Study Group, said in an interview last week. That compares with the group’s forecast range of 10.1 million to 10.6 million tons on March 17.

Demand will probably increase by 4.4 percent this year to 9.8 million tons, based on the assumption that the economic recovery will slow, Evans said. The group forecast 10.2 million tons in March.

(bloomberg.com)