India Rubber: Up on likely rise in demand from tyre cos, global cues

Prices of natural rubber rose in key markets of Kerala on expectations of a rise in demand from Indian tyre makers. Gains in the global market further supported prices in the Indian market, traders said.

* "Tyre companies are seeing good demand for tractor and two-wheeler tyres. During Jul-Sep, production was good and the current quarter…will hopefully be better," said Rajiv Buddhraja, director general of Automotive Tyre Manufacturers Association. 

* On the global front, benchmark rubber contract on the Tokyo Commodity Exchange closed higher today on hopes of recovery in demand from China, the largest consumer. Recently, China marginally raised its consumption outlook for 2020 in view of earlier-than-expected recovery in economy and acceleration in growth.

* Concerns over fall in global supply are also seen supporting rubber prices on the TOCOM. Unfavourable weather conditions in key growing areas of Thailand, the largest producer, have raised concerns over output, analysts said. 

* Gains in the crude oil contracts on the New York Mercantile Exchange is creating bullishness in the market. Prices of natural rubber take cues from those of crude oil as the latter is used to make synthetic rubber. 

* However, sluggish demand from domestic stockists and expectations of a rise in supply capped sharp gains in rubber prices in Kerala markets, said John Joseph, the owner of J.J.Trading based in Kerala.

* Demand from domestic stockists is subdued because of a recent surge in prices. The supply of rubber is likely to rise given tapping activity is in full swing as Oct-Dec is the peak production season, traders said.

* Following are highlights of today's trade:

 –In Kochi and Kottayam, the widely-traded RSS-4 variety was sold at 152-154 rupees per kg, up 1-2 rupees from Tuesday, traders said.

 –The most active April contract on the TOCOM settled at 222.3 yen (about 156.88 rupees), up 2.4 yen from the previous close.  End