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

MARKET COMMENTARY

Supported by improving demand from the tyre sector, RSS4 in the local market is seen steadying after the recent steep sell off. A firm trend being witnessed in the overseas market is likely to support the sentiments too. On Tuesday, RSS4 in the physical market was quoted slightly higher while NMCE rubber futures were edged up for the third successive session though prices were moving in narrow ranges through out the day. Anticipation of higher production and arrivals as market is currently in the midst of the peak production season capped gains.
A mixed trend in natural rubber is being seen in the overseas market. While SHFE rubber future is swinging between positive and negative territories, TOCOM and AFET rubber futures rose. The benchmark May rubber futures in TOCOM surged towards a two month high, gaining nearly 1.5 per cent ahead of the US FOMC monetary policy announcement. Also, investors were eying the meeting of the top three natural rubber producing countries in Bangkok.

TECHNICAL VIEW

According to Thai Rubber Association, natural rubber exports from the country is seen rising only 3.0-5.0 per cent in the next year.
Crude rubber stockpiles held at Japanese warehouses fell 5.1 percent to 6,186 metric tons on Nov. 30 from ten days before, according to data from the Rubber Trade Association of Japan.
According to SIAM, while total sales of vehicles registered a growth of 1.79 per cent in November, passenger car sales dropped 8.5 per cent owing to high interest rates and fuel prices and other macro-economic factors.
China’s monthly passenger-vehicle sales rose to its highest in almost two years to 1.46 million units in November according to CAAM.
According to a report appeared in The Hindu, leaders of various political parties have expressed concern over the fall in price of natural rubber (NR) and have called upon the Central government to initiate the necessary measures to arrest the slide.

TECHNICAL VIEW

RUBBER Jan NMCE Prices are currently on a consolidation mode for the last two days after the bounce back from 16080 levels. Even as the broad trend stays weak, it seems some upsides are in store in the near term. For the day, in choppy trades prices are likely to edge higher but require a convincing violation of 16860 for further upsides. Slippage past 16400 is likely to call for a lower correction, yet another round of steep sell off may be seen only below 15900 regions.