[Geojit Comtrade] Daily report on Natural Rubber: February 4, 2013

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MARKET COMMENTARY

The broad trend stayed bearish in the local natural rubber market. In the week gone by, rates for RSS4 grade rubber plunged to its weakest in 34-months and similar moves were witnessed in the futures market too. However, a marginal recovery was seen towards the close of the week. Underlying market fundamentals are mixed. While higher domestic production and rising stocks have been pressurizing prices, sporadic lower level buying by the tyre sector and rising international natural rubber prices lent lower level support. Also, with prospects of exports increasing and lean production phase to start soon, steep declines may remain restricted.

As the week begins, TOCOM rubber futures rallied to hit a 10- month high backed by a weaker yen that depreciated to its lowest in 33-months against the US dollar. The benchmark July rubber futures jumped over four per cent earlier today. SHFE and AFET rubber futures rose as well. However, activities are likely to slowdown as China will go on a week long holiday starting 09-Feb.

MARKET NEWS

According to Association of Natural Rubber Producing Countries, rubber imports by the top consumer China surged 18 per cent during 2013 to 3.37 million tonnes.

Rubber inventories in the warehouse monitored by SHFE rose 0.8 per cent to 98814 tonnes.

According to Malaysian Rubber Board, natural rubber output may expand 6.5 per cent in 2013 on improving yield and higher prices.

According to Rubber Trade Association of Japan, crude rubber inventories in the Japanese ports fell by 202 tonnes to 6934 tonnes in the 10 days to January 10 from a four month peak marked at the end of 2012

According to Vietnam’s General Statistics Office, the nation shipped 117,000 tons of rubber in Dec., up 11% from previous assessment of 105,000 tons.

TOCOM January rubber futures expired with 124 lots being delivered compared to 288 lots being delivered in December.

According to IRSG, NR production is set to outpace consumption by 179,000 metric tons this year and 153,000 tons in 2014.

TECHNICAL VIEW

RUBBER Feb NMCE

Broad Trend: Weak

Near Term: Pullbacks from 15500 levels likely to continue and clearing 16250 may lessen the prevailing negative sentiments. Require a close below 15500 for prolongation of the ensuing weakness.

TURNAROUND