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[Geojit Comtrade] Daily report on Natural Rubber: December 9, 2013

MARKET COMMENTARY

Last week saw RSS4 in the Indian markets diving down again to test its weakest level in more than three and a half years dragged by an unfavourable decision from the Finance Ministry on raising import duty on natural rubber. Subdued demand from the tyre sector weighed on too. However, a mild rebound was witnessed towards the close of the week. Worries over local supplies despite it being the peak production phase and narrowing difference between natural rubber prices in the local and international market lend lower level support to the prices.

As the week’s session commences, natural rubber in the overseas market had a strong opening with TOCOM and SHFE rubber futures jumping nearly two per cent on strong trade data from China. Weakening yen too bolstered the prices.

MARKET NEWS

China’s natural rubber imports surged to 270000 tonnes in November, a rise of 42 per cent on month on month basis and 25 per cent year on year.

Rubber inventories in the warehouses monitored by SHFE rose 7.2 per cent last week to 161896 tonnes.

In the meeting of the Executive Committee of Rubber Board, the members demand either a ban on natural rubber imports or temporary suspension of imports against advance licence. The Committee also suggested to raise the import duty to 25 per cent and urged the State and the Central Government to implement a scheme for joint procurement of rubber.

According to ANRPC, natural rubber output from the key growers rose 3.1 per cent during Jan-Nov period this year.

In response to the demand raised by Kerala to hike import duty on natural rubber, the Finance Minister raised doubts regarding feasibility of raising the import duty when natural rubber prices have increased in the international market though assured that the request will be looked upon.

Indonesia’s main rubber grouping has called on the world’s second largest producer to cut output next year by 10 percent and urged other Southeast Asia rubber-growing countries to do the same to reduce global stocks and support prices.

TECHNICAL VIEW

 RUBBER Jan NMCE

The bounce seen from the recent lows of 15200 ranges is likely to continue towards 15650 or even more, but requires clearing and sustaining above the stiff resistance at 15950 to bring about a positive bias. Slippage past 15200-15100 range may induce strong weakness.

TURNAROUND

Resistances

LEVELS

 Supports

15650/15800

15950-15650-15200

15470/15350

15950/16050

15200-15100

16150/16250

15000-14950

 

Source: Geojit Comtrade

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