MUMBAI/SINGAPORE : Rubber markets are witnessing a slight rebound as as government raised import duty on rubber to 20% or Rs 30 kg from Rs 20 per kg earlier which brought some cheer to rubber growers even as the major consumers of the commodity remained unhappy with the announcement. At Tokyo Commodity Exchange, rubber futures has rebound from three-week low as Japanese Yen fell to the weakest level in five yearas against the dollar. Fundamentals are still not supportive for rubber in global markets as surplus is expected to climb in 2014, analysts said.
Rubber spot market rates which fell to Rs 153.50 per kg with many investors fearing a crash to Rs 140 per kg early in December, has now risen to Rs 160 per kg levels thanks to import duty hike and fall in production in key growing regions, analysts said.
Rubber Board had earlier estimated a production of 960,000 tons and consumption of 10,20,000 tons for 2013-14. However, actual production may fall to 870000 tons while industry fears it may even fall to 8 lakh tons.
Meanwhile, the All India Rubber Industries Association (AIRIA) and the Automotive Tyre Manufacturers Association (ATMA), have said that the decision to raise import duty by the India government is a retrograde step and in total contravention of the policy to increase manufacturing competitiveness in the rubber sector.
According to Raghupati Singhania, Vice Chairman, ATMA, a hefty increase in duty of Rs 10 per kg would significantly increase the raw material cost of the tyre industry and would add to the inflationary trends in the auto and transport sectors.
As such the tyre industry is witnessing lower offtake of tyres in view of slowdown in auto sector, the increase in import duty on principal raw material will make it tougher for the industry to manage the challenging environment, he said.
Global markets
With a weak Yen, Tocom Rubber futures for June delivery rose to a high of 276.5 Yen per kg after falling to 272.4 Yen per kg, the lowest level since November 29. The prices of TOCOM rubber has fallen 9.2% this year.
Rubber for May delivery on the Shanghai Futures Exchange was little changed at 18,415 yuan ($3,033) a ton, recovering from a four-month low of 18,155 yuan reached yesterday.
Thai rubber free-on-board was unchanged at 83.45 baht ($2.55) a kilogram yesterday, according to the Rubber Research Institute of Thailand. A global surplus may climb to 366,000 tons next year from an estimated 336,000 tons this year, Bloomberg quoting The Rubber Economist, a London-based industry adviser, said.
Source: Commodity Online
