[Geojit Comtrade] Daily report on Natural Rubber: November 12, 2012

MARKET COMMENTARY

Amidst slack buying by the tyre sector, natural rubber prices plunged to its weakest since early September in the gone by week. In both the spot market and the futures RSS4 slipped towards the close of the week, with the benchmark December rubber futures testing nine week low of Rs.17100 per 100 kg before recovery marginally on Saturday. The underlying market fundamentals stayed bearish. Surging imports in the middle of peak production period and subdued demand is likely to keep a lid on the prices.
As the week’s session begins, natural rubber in the global market is seen declining. Extending the previous week’s losses, TOCOM rubber futures inched lower to a two month low as worries over economic growth gripped the markets. Concerns over a weak Japanese GDP amidst the US fiscal woes dampened the overall market sentiments.

TECHNICAL VIEW

According to Association of Natural Rubber Producing Countries, Malaysia slashed the production forecast for 2012 by 50000 tonnes to 950000 tonnes. Meanwhile, China’s consumption is seen at 3.77 million tonnes from the earlier estimates of 3.69 million tonnes.
According to Indonesia’s Deputy Farm Minister, International Tripartite Rubber Council will meet in mid-December to discuss market development and supply management.
China’s natural rubber imports dropped 19 per cent on MoM basis to 170000 tonnes in October from 210000 tonnes the previous month.
Rubber inventories in the warehouses monitored by SHFE rose 2.3 per cent to 64405 tonnes in the previous week.
According to the Rubber Board, India’s natural rubber imports more than doubled in October on YoY basis to 18326 tonnes. Production dropped 3.35 per cent to 86300 tonnes while consumption rose 8.5 per cent to 83000 tonnes during the same period.
Cambodia’s rubber exports rose 12 per cent on YoY basis during the first nine months of 2012 to 39360 tonnes.

TECHNICAL VIEW

RUBBER Dec NMCE

The bounce back seen after taking support at 17100 in the previous week is unlikely to continue as long as 17500-17650 regions caps upside. However, successful attempts to move past may lift prices to 17720-17840 initially followed by 17960.

Slippage past 17100 will induce further weakness.

Source: Geojit Comtrade

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