India Natural Rubber: Mixed trend in spot; bullish in futures

Last Updated : 10 October 2012 at 09:10 IST
KOTTAYAM (Commodity Online): India natural rubber witnessed mixed trend in spot markets and bullish trend in futures on Tuesday.

RSS 4 variety of natural rubber was traded at the rate of Rs.191/Kg even as RSS 5 was seen trading at Rs.187/Kg. Ungraded rubber was traded for Rs.180/Kg.

There have been no rains and tyre companies are not participating in trade, sources said.

“Still information suggests that they purchase natural rubber in anonymity. They don't give much of publicity in this regard. Given that prices are ruling low in natural rubber in the international markets, there have been no exports happening.” a trader informed.

Meanwhile, in the spot markets on Monday, RSS 4 variety was traded at the rate of Rs.192-193/Kg and RSS 5 variety at Rs.187/Kg. Spot close price-- the price according to close of trade that is carried out at the fag end of the day; at 6.00 pm or after-- ruled at Rs.190/Kg and Rs.186/Kg on Monday. The overall trend had been bearish in spot for that day.

Tuesday Futures

Rubber futures on the NMCE opened at Rs.18140, touched a high of Rs.18796, a low of Rs.18410 and closed at Rs.18249. Meanwhile, NMCE natural rubber ware house stocks as on Monday is estimated at 7 tons.

“Some buying in natural rubber futures may occur in coming sessions. From current levels, Rs.18150 looks good support for the week while Rs.19200 is the resistance for the same. Trend appears to be bullish in futures.” our in-house analysts said.

Global trends

Natural rubber prices witnessed mixed trends in global market as weak crude oil prices dampened market sentiments while supply curbs by leading producers, Thailand, Indonesia and Malaysia continues to provide positive support to prices.

At Tokyo Commodity Exchange, benchmark March contractrose 3.7 Yen in day session to 273.8 Yen per kg but fell back to 271.6 Yen per kg as International Monetary Fund (IMF) lowered forecast for economic growth.

US WTI crude oil futures remained weak at $89 levels which is not supportive of natural rubber.

In India rains have weakened in the key growing region of Kerala state in south India and production has intensified while tyre sector is not an active buyer in the market due to prevailing Rs 15-20 per kg price differential between Indian and global prices.

As published in: http://www.commodityonline.com/news/india-natural-rubber-mixed-trend-in-spot;-bullish-in-futures-50786-3-50787.html

Solving the data puzzle on India natural rubber fundamentals

Is the Indian Rubber market facing acute shortage of natural rubber?

Is there any problem with the statistical methods that India Rubber Board employs to calculate stocks?

As per the latest figures available with India's Rubber Board, June-end surplus stocks—or stocks that are available for July with traders—stands at 190312 metric tons.

Meanwhile, the anticipated production figures for August and September are pegged at 71200 tons and 80200 tons respectively. Consumption for the same months are estimated to be 77000 tons and 74000 tons.

The table tells that the excess requirement for the month of August and September stands at 5800 tons and 6200 tons respectively. Imports—block rubber and sheet rubber—for the months stand at 17605 tons and 9100 tons. While the scenario of excess demand fades in August due to aggressive imports at 17605 tons, excess demand for September is expected to be at 2900 tons.

Now, as slowdown takes over the global economy, sluggishness is visible with consumption of rubber in offtakes down to 74000 tons for the month of September.

Though data to this end is yet to be made available, one can safely assume that with July surplus at 190312 tons, coupled with global slowdown denting demand, the requirement would be lethargic.

Result: Surplus Rubber in the country

(Quantity in tons)



Addressing the second question: it is often held by industry bodies like ATMA(Automotive Tyre Manufacturers Association) and AIRIA(All India Rubber Industries Association) that rubber board is making a serious statistical error in calculating the stocks in country; that board is taking into account even the already sold stock which is the inventory of various manufacturing companies.

But, as long as natural rubber is kept as it is, as long as natural rubber is not converted to end-product, the board has no other options; but to follow the current methodology in tabulating stocks.

And the Board is providing stock figures in a segregated form in its statistical news bulletin published every month which is available online.

So, the conclusion that Board's 'erroneous' figures may affect policy prescriptions holds no water.

As published in: http://www.commodityonline.com/news/Solving-the-data-puzzle-on-India-natural-rubber-fundamentals-43105-3-1.html