Rubber prices to make condoms a costly affair

KOCHI: "Not tonight honey, it’s expensive.” This might soon replace the old line about headaches in Indian bedrooms, as condom manufacturers are grappling with an unprecedented rise in the price of latex, the key raw material behind the ubiquitous contraceptive. With latex prices ballooning nearly 200% year-on-year, condom manufacturers are set to announce price hikes across product lines, in a move that will likely have a deflationary effect on condom sales.

In a highly-competitive segment with little brand loyalty, firms are yet to decide on the quantum of the hike. Hikes are expected to be first announced in the high-end segments and are likely to be in the region of 10-15%.

As latex prices have risen dramatically in the course of the year, many small-scale manufacturers have gone out of business. “We have been forced to buy latex at a high price which is impacting our bottom line,” said Rajneesh Jain, director, Secure PersonalCare, a Gujarat-based condom manufacturer. At least half-a-dozen units in the small-scale sector have downed shutters, unable to contain the rising costs, he said.

It is not just the small-scale units that are feeling the pinch of latex price rise in the Rs 1,000-crore industry. Large companies are also moving to tide over the spike in prices. HLL Lifecare, which manufactures the Moods brand of condoms, is likely to announce a rate hike in two stages. It will increase its prices in the export market initially. “After this, we will bring about a similar price hike in the branded segment in the domestic market. But it will not be immediate,” M Ayyappan, chairman and managing director, HLL Lifecare, said. The whole process is likely to take about six months, he added.

In the branded segment, most companies are marketing different types of condoms. Moods, for instance, markets condoms that range from Rs15 to Rs 25 for a packet of three. TTK LIG, which manufactures the Kohinoor brand, and JK Ansell, the makers of the Kamasutra brand, are the top two players by sales, in the non-government retail market.

The government is the single-largest buyer of condoms and accounts for bulk of the revenues for many companies. The price of latex has gone up to Rs135 per kg from Rs46 per kg a year ago. Latex accounts for about 22% of the material costs in condom manufacturing. The industry has so far refrained from a price hike due to competition from imported condoms. Condoms from China and Malaysia are flooding the local market. On an average, they are about 15% cheaper than domestic brands, despite the 10% customs duty.

Despite the rise in latex prices, companies like Chennai-based TTK LIG has not raised price in the recent past. “We are studying the issue of latex price rise and would soon decide how to go about it,” said a senior TTK LIG official. The company has a requirement of 250 tonnes of latex per month. They also market the international brand Durex in India.

India’s condom industry has about 10-15 players, of which, only three to four are big players. Many small players manufacture for larger players under the original equipment manufacturer system, and also market regional brands.

While the condom manufacturers can think in terms of a price hike in the open market, they are in a tight spot as far as government supplies are concerned. For a company like HLL Lifecare, which sells 70-75% of its production to the government, this is all the more important. “We are hoping that there would be a rate hike,” Mr Ayyappan said. The company has made representations to the government for a price revision.

The government buys condoms from companies at an average price of Rs 1.40 to Rs 1.50 per piece. About 75% of the government’s purchase is from public sector unit, HLL, and the rest from private sector.

(economictimes.indiatimes.com)

Rubber import duty: Centre''s decision not justified, say

Kottayam, Sept 12 (PTI): The commerce ministry''s decision to modify import duty on rubber was unjustified and should be reexamined, according to Kerala Congress(M) chairman K M Mani. "The Centre earlier imposed import duty of 40 per cent and reduced it to 13 per cent which should be reexamined. 

The price of rubber will come down if the centre imports one lakh tonne of rubber through this duty structure," he said. He was speaking after inaugurating Rubber Board Technical Guild, an organisation affiliated to KC(M) and work for the welfare of technical employees of Rubber Board in the country here yesterday. Mani reiterated his demand that import cess for natural rubber be put back at 20 per cent to save the interests of lakhs of growers in the country. He assured that all efforts would be made to raise the status of Rubber Research Institute of India on par with Indian Council for Scientific Research. He urged the Centre to revise the payscale and perks of emplopyees of RRII at the earliest.

(ibnlive.in.com)

SRIB To Expand Rubber Planting In Sabah's East Coast

SANDAKAN, Sept 11 (Bernama) -- The Sabah Rubber Industry Board (SRIB) is planning on expanding the acreage of rubber planting in the east coast area of the state, its Chairman Datuk Zakaria Edris said.

Rubber planting activities in the state are currently concentrated in the west coast and interior areas to help generate income for the local rural folks.

Zakaria said SRIB was in the midst of identifying a suitable place for rubber planting in the east coast to increase the state's production of the commodity.

"Although the east coast areas are known for their oil palm, there are areas which are not suitable for the crop and can be used for the planting of rubber," he told Bernama on Saturday.

Among the state's rural areas where rubber planting is being carried out in big scale are Semenanjung Bengkoka Pitas, Tomani Tenom and Sipitang.

He said locals participating in the rubber planting scheme have begun to see the benefits for them -- high and steady monthly income.

It has not only generated income for them but has also helped them to come out of their poverty.

"This is in line with SRIB, a state owned subsidiary company which has the role of helping to eradicate poverty among the rural folks by helping them earn their income through rubber planting activities," he said.

Zakaria said SRIB also welcomed villagers in the state wanting to work on their abandoned land by planting them with rubber. He said they would be given assistance in the form of advisory services and high quality rubber seedlings.

(bernama.com.my)

Rubber, Little Changed, Set to Drop for Second Week on China Rate Concern

Rubber declined, booking a second weekly drop, as investor demand for the commodity weakened amid speculation that China may be preparing to raise a benchmark interest rate.

Futures in Tokyo extended losses for a fourth day after dropping to a two-week low yesterday on speculation that Chinese regulators were investigating large positions in natural rubber on the Shanghai Futures Exchange. China is the world’s largest consumer of the commodity used in tires.

China brought forward the release of August economic indicators by two days, spurring speculation the central bank may be preparing to raise a benchmark interest rate before markets open on Monday. Inflation may have accelerated to 3.5 percent in August, based on the median estimate of 31 economists in a Bloomberg News survey.

“Investors are cautious as China may take action to cool economic expansion,” Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said today by phone. “A higher interest rate could damp raw-material demand.”

February-delivery rubber fell 0.2 percent to settle at 293 yen per kilogram ($3,485 a metric ton) on the Tokyo Commodity Exchange. The price has lost 1.7 percent this week.

Shanghai Drops

January-delivery rubber on the Shanghai Futures Exchange dropped to 25,130 yuan ($3,714) a ton, the lowest level since Aug. 25, before settling at 25,380 yuan. Yesterday it slumped by the most in three months as the Securities Times reported regulators are investigating natural rubber positions, spurring concern that some traders may be forced to sell.

Before the price slumped yesterday, Shanghai futures climbed to 26,725 yuan, the highest level since July 2008, as accelerating growth in China’s car sales raised the outlook for demand from tire makers.

Global natural rubber consumption this year will exceed supply as a recovery in vehicle sales fuels demand for tires and as users rebuild inventory, the International Rubber Study Group said yesterday.

Demand will total 13.3 million tons this year, 114,000 tons higher than a previous forecast, the Singapore-based group said in an e-mailed statement. Production will increase 6.1 percent to 10.25 million tons this year and by 7.3 percent to 11 million tons in 2011, it said.

China’s passenger-car sales to dealerships grew at a faster pace in August as dealers offered discounts. Wholesale deliveries of passenger cars rose 18.7 percent to 1.02 million units in August, compared with 13.6 percent growth in July, the China Association of Automobile Manufacturers said yesterday. Deliveries surged 90 percent in August 2009 after government incentives bolstered demand.

(bloomberg.com)

Rubber prices may go up to Rs 18,000 per quintal level

Surge in rubber prices in the international markets coupled with increased buying from tyre makers may push the prices of the commodity in the domestic market to Rs 18,000 per quintal level.

Rubber prices jumped by Rs 250 from Rs 16,450 per quintal to Rs 16,700 yesterday as on September 6, 2010.

"After the government's proposal to cap import duty at Rs 20 per kg, tyre makers postponed buying anticipating low prices. However, after seeing resistance from rubber growers, they have resumed buying, which has led to a jump in the prices of rubber," All-India Rubber Dealer Federation President George Valy told PTI.

    

He said, international rubber prices are now at more than Rs 16,300 level, however with the addition of import duty and freight cost, the landing cost of the rubber would be more than Rs 19,000 per quintal.

  

"Now, with this development, there is enough room for the increase in rubber prices in the domestic market and this could go up to Rs 18,000 per quintal level," Valy said.

    

Rubber prices in the domestic market declined from Rs 18,600 per quintal on August 6, to Rs 16,350 per quintal on September 2, and market experts had further predicted that it may further go down to Rs 15,000-level following which tyre makers had postponed their purchases.

    

However, with rubber growers showing firm resistance in selling their products at this level, tyre makers are resuming their buying here.

    

Before import duty was fixed, the prices of rubber in the international market stood at around Rs 15,000 per quintal, but following the proposal to cap import duty, they went up to Rs 16,000 per quintal, he said, adding that it may go up to Rs 18,000 per quintal.

(business-standard.com)

IRCo's WEEKLY MARKET SNAPSHOT: 30 August - 3 September 2010

IRCo's DCP gained 2.54 US cents/kg., and natural rubber (NR) prices in Thailand, Indonesia, and Malaysia also rose higher on Friday comparing to Monday due mainly to the upbeat Shanghai rubber futures during the week and firm fundamentals continued in the physical rubber market and lower-than-usual supplies in major producing countries.

At the same time, stocks on Wall Street went up for the last three days of the week as U.S. investors were optimistic about the U.S. economic stability on the back of the better-than-expected increase of 67,000 jobs and the lower-than-expected U.S. non-farm payrolls of 54,000 jobs reported by the U.S. Bureau of Labor Statistics on Friday. The bellwether stock of Asia, Nikkei 225 in Tokyo, also rose for the third session on Friday after Sony and Toyota Motor charged ahead.

However, a persisting strengthening yen against the greenback still disturb and still cause a headache to Japanese exporters despite the Japanese government offered a modest stimulus package and its central bank took steps aimed at curbing the rising yen on Monday. Likewise, the rising value of currencies of Thailand, Indonesia, and Malaysia during the week was undermining export competitiveness. In addition, the slightly fall in crude oil futures on New York Mercantile Exchange on Friday from an earlier Friday did not have much impact on NR prices.  

(irco.biz)

Rubber Drops as Yen Surges to 15-Year High, Shares Slump on Growth Concern

Rubber fell after Japan’s currency jumped to a 15-year high against the dollar, cutting the appeal of yen-based contracts, and as equities and commodities dropped amid concern that the global economic recovery may be faltering.

Futures in Tokyo lost as much as 1.2 percent to 296.3 yen per kilogram, retreating further from a four-month high of 302.5 yen per kilogram ($3,614 a metric ton) reached on Sept. 6. February-delivery rubber settled at 298.7 yen.

The yen advanced before the U.S. Federal Reserve releases its Beige Book business survey that may show the U.S. recovery is stalling. Risk aversion by investors also increased after German factory orders unexpectedly decreased in July, and Germany’s banking association said the nation’s lenders need to raise $135 billion because of new regulation, according to Hisaaki Tasaka, an analyst at Tokyo-based broker ACE Koeki Co.

“Industrial raw materials are vulnerable for selling amid concerns about the economic recovery,” Tasaka said by phone today. “Rubber tracked losses in oil and metals.”

The yen rose to 83.35 per dollar, the strongest since May 1995. The MSCI Asia Pacific Index sank 1.4 percent to 120.11.

‘Lingering Worries’

“There are lingering worries the U.S. economic recovery may be tepid,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “This is a negative for the dollar,” said Soma.

German factory orders, adjusted for seasonal swings and inflation, fell 2.2 percent from June, when they surged a revised 3.6 percent, the Economy Ministry in Berlin said yesterday. It’s the biggest drop since February 2009.

The Fed will release its survey of conditions in its 12 districts today before officials meet to review monetary policy on Sept. 21. The jobless rate in the U.S. is likely to approach 10 percent in coming months as the economy fails to grow enough to employ people rejoining the labor force, economists said.

Losses in rubber futures were limited as rain curbed supply from Thailand, the world’s largest producer and exporter.

The Thai cash price was unchanged at 109.20 baht ($3.50) per kilogram, according to the Rubber Research Institute of Thailand. Rubber availability remains thin as rains in southern Thailand, the country’s main plantation area, have disrupted tapping, it said.

January-delivery rubber on the Shanghai Futures Exchange gained 0.2 percent to close at 26,450 yuan ($3,892) a ton. It climbed to 26,645 yuan on Sept. 6, the highest level since July 2008, as accelerating growth in China’s car sales raised the outlook for demand.

Natural-rubber inventories monitored by the Shanghai exchange expanded 1,119 tons to 25,820 tons, the bourse said on Sept. 3.

(bloomberg.com)