[Geojit Comtrade] Daily report on Natural Rubber: November 5, 2014

MARKET COMMENTARY

Natural rubber in the international market were in deep red, stretching the previous day’s losses. Overall market sentiments were in doldrums as worries over demand gripped the market amidst steep declines in crude oil prices. On Wednesday, TOCOM rubber futures slumped more than three per cent moving further away from the ten week high hit last week. While concerns over demand from China has been bothering the market for long, European Union revising down the growth forecast and slump in oil prices deepened the woes over demand. SHFE and AFET rubber futures tumbled as well. In the meantime, bearishness was witnessed in the local natural rubber market too. While NMCE stayed closed on Tuesday on account of Moharum, in the physical market RSS4 stretched losses to hit one month low. Lacklusture demand and steep declines being witnessed in the overseas market pressured prices to move south.

MARKET NEWS

⊳ Inventories in Qingdao, China’s main rubber-trading hub, -3.1% to 139,400 mt: Qingdao International Rubber Exchange Market.

⊳ Japan-based Yokohama Rubber today says it has started commercial production at its first manufacturing plant in India at Bahadurgarh, Haryana with an investment of over Rs 300 crore and the unit has an installed capacity of 2,000 tyres per day.

⊳ Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 1.3 percent to 173792 tonnes last week.

⊳ Thailand, Indonesia and Malaysia likely to meet on Nov. 20-21 to discuss plans to set prices together and reduce supply.

⊳ Indonesian Rubber Association makes a second appeal to its members to impose strict limit on sales until the second quarter of 2015

⊳ The Malaysian government has allocated 100 million ringgit ($30.4 million) to support rubber farmers following a slump in global prices to five-year lows. A subsidy programme will be activated when the price of SMR20 grade rubber falls to 4.60 ringgit per kg.

⊳ Thailand’s National Rubber Policy Committee approves a plan to buy rubber from October 22 to prop-up prices. According to the nation’s Deputy PM, Rubber Estate Organisation will spend 20 billion baht for building stockpiles. Another 10 billion baht will be allocated to rubber groups to buy rubber sheets.

TECHNICAL VIEW

RUBBER Dec NMCE

Sustained trades below 11950 with volume are likely to drag lower prices to 11750-11600 ranges or more. While, support at 11450 likely to act as a firm support from where a bounce back cannot be ruled out, slippage past the same will strengthen the bears. Alternatively, a direct rise over 12250 could lessen the prevailing weakness.

TURNAROUND