[Geojit Comtrade] Daily report on Natural Rubber: December 7, 2012

MARKET COMMENTARY

Resuming its downtrend, natural rubber in the Indian market slipped further on Thursday, pressured by anticipation of higher production as markets are currently in the middle of peak production season. RSS4 grade rubber touched a fresh 27-month low of Rs.160/kg in the major Kottayam market. Erasing earlier gains, NMCE rubber futures dwindled, shedding around two per cent. Muted demand from the major natural rubber consuming sector and rising stockpiles in warehouses too weighed on. However, with steep fall in natural rubber prices in the local market, the gap between quotes prevailing in local and international market has narrowed down considerably and currently Bangkok RSS3 is on a premium compared to Indian RSS4.
As the week’s session concludes, natural rubber in the overseas market are seen swinging between positive and negative territories. Erasing initial losses, TOCOM rubber futures inched up and were probably on its course to post weekly gains. However, caution prevailed in the market ahead of the US non-farm payrolls data.

TECHNICAL VIEW

Vietnam, the world’s fourth-largest rubber exporter, may join the International Tripartite Rubber Council of top producing nations, strengthening the group which has agreed to cut shipments to support prices.
US auto sales climbed 15 per cent in November to 1.14 million vehicles.
According to China Rubber Industry Association, China’s total tire output will increase 5.9% to 483m pieces in 2012.
Crude rubber inventories at Japanese ports eased from two month high earlier to 6520 tonnes by November 20 from 6739 tonnes 10- days before, according to Rubber Trade Association of Japan.
According to ANRPC, China’s Jan.-Nov. consumption rose 6.7% to 3.51million tonne and its natural rubber consumption this year is anticipated to be 3.83 million tonne from 3.77million tonne.
Rubber stocks held by Thai Govt stand at 170000 tonnes and are expected to rise to 410000 tonnes by March-end.

TECHNICAL VIEW

RUBBER Jan NMCE

Inability to clear 16800 saw prices resuming decline and fell past the falling trend channel support in the previous session. The trend stays bearish and with the breach of trend channel support, the prospects of a fall towards 15950-15500 region in the near term seem high. Yet, immediately, prices will have to clear a considerably strong support at 16180 for such moves. Alternatively, 16180, if held downside may call for a bounce back possibly to 16450-16530 initially, followed by 16650/16800.

Source: Geojit Comtrade

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