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TOCOM Rubber falls to 5-month low on China growth concerns, India prices fall sharply

At TOCOM, JUne delivery contract has fallen to 252.1 uem [er log ($2,413 per metric ton) and trading in 251.8-254.6 range. Rubber market has been impacted by China manufacturing and GDP growth data which points a nega.

TOKYO/KOTTAYAM, INDIA (Commodity Online): Rubber futures at Tokyo Commodity Exchange (TOCOM) has fallen to a five-month low as China demand is expected to weaken on slower GDP growth while Indian prices have fallen sharply by 7.5% in January till date to a low of Rs 15000 per 100 kg on global cues, weak automobile sales growth and higher inventory of rubber on increased imports.

At TOCOM, JUne delivery contract has fallen to 252.1 Yuan per kg ($2,413 per metric ton) and trading in 251.8-254.6 range. Rubber market has been impacted by China manufacturing and GDP growth data which points a negative picture regarding demand from automotive industry. nnual car sales in India declined for the first time in 11 years in 2013, posting a 9.59 percent fall, according to SIAM.

Futures for May delivery on the Shanghai Futures Exchange lost 1.4 percent to 16,660 yuan ($2,753) a ton. Stockpiles monitored by the bourse increased 5.6 percent to 200,815 tons, the largest since October 2004, exchange data showed on Jan. 17. It was the seventh straight week of gain.

Rubber free-on-board was unchanged at 77.25 baht ($2.35) a kilogram yesterday, according to the Rubber Research Institute of Thailand. Auctions at Surat Thani rubber market resumed yesterday after being canceled last week on lack of supply, said Sirirat Rattanamontri, an officer at the state-run market, Bloomberg reported.

India’s effort to keep prices in check through increase in import duty yielded results only for a brief while and markets have gone into bearish mode. The announcement on December 20, 2013 to increase the import duty to 20% or Rs 30 per kg had reulsted in the prices climbing to Rs 16200 per 100 kg but only for a while. Thailand prices are presently Rs 5 per kg less than Indian prices and hence weak demand for domestic rubber.

The revision was effected due to protests by the growers and the political pressure from various parties in Kerala.

India’s rubber imports have climbed to a record in fiscal year 2013-14 as monsoon rains cut production and tyre industry increased imports on account of lower global prices, analysts said.

Shipments will probably climb 38 percent to 300,000 metric tons in the 12 months through March from 217,364 tons a year earlier, said Rajiv Budhraja, director general of the Automotive Tyre Manufacturers Association. Imports jumped 53 percent to 264,576 tons from April to December from a year earlier,according to data from the state-run Rubber Board.

There are fears that if growers continue to hoard the commodity in view of lower prices, tyre industry may go for more imports thereby causing bearishness to prevail further in rubber. Hence, a total ban on imports for three months has been suggested by some analysts.

Commodity Online

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