Daily report on Natural Rubber: January 19, 2015

MARKET COMMENTARY

Last week saw natural rubber in the Indian market slumping to its lowest level in four weeks. On NMCE, the most active February rubber futures posted losses for the second successive week dragged down by weakness in the overseas natural rubber market and lacklusture local demand. RSS4 was quoted lower in the physical market too and ended around Rs.118 a kg compared to Rs.124 quoted a week earlier.

A rebound is being witnessed in natural rubber in the international market as the week’s session commences. TOCOM rubber futures gained nearly one per cent backed by a weaker yen. However, caution prevailed in the market ahead of the release of the key economic data releases from the top consumer China.

MARKET NEWS

Rubber inventories in the warehouses monitored by SHFE rose 5.7 per cent to 160297 tonnes last week.

Ivory Coast’s natural rubber output for 2014 reached 311,429 tonnes, exceeding a forecast of 296,456 tonnes, the head of the natural rubber association said.

Kerala Chief Minister and Opposition Leader submitted a memorandum before the Prime Minister, urging the latter to take necessary steps to solve the problems faced by rubber sector.

According to International Rubber Study Group, global production of natural rubber is to exceed consumption by 77,000 mt this year before narrowing to 51,000 mt in 2016.

China has approved a new standard for compound rubber that reduces the amount of natural rubber allowed in the formula. The new standard, which will cap natural rubber content in the compound to 88 per cent, down from 95-99.5 per cent previously, will be implemented on 01 July.

According to International Rubber Study Group, global natural rubber demand in 2015 is anticipated to increase 3.1 per cent to 12.3 million tonnes.

Thai Prime Minister says government trying to boost natural rubber prices to 65 baht a kg without providing details on ways to prop-up prices.

Natural rubber production in India tumbled 36 per cent in December to 63000 tonnes on YoY basis. Consumption declined as well by 1.8 per cent to 83500 tonnes while imports rose 8.0 per cent during the same time.

Crude rubber inventories at Japanese ports stood at 12,987 tonnes as of Dec. 20, up 15.1 pct from 10 days earlier, data from the Rubber Trade Association of Japan showed.

According to Union Commerce Minister the period for the export of rubber imported under the advanced licensing system has been reduced to six months from the earlier 18 months.

TECHNICAL COMMENTRY

RUBBER Feb NMCE

While there exist weakens, the pullback being witness after taking support at 11625 is likely to continue towards 12100 or more if it clears the immediate resistance of 11930. A direct fall below 11620 will see a selloff to 11580/11480.