[Geofin Comtrade] Daily report on Natural Rubber: January 8, 2015

MARKET COMMENTARY

Dragged down by weakness in the international market, natural rubber ended lower in the Indian markets on Wednesday. NMCE rubber futures had hit a three week low before culminating the session more than 1.5 per cent down, while in the physical market, RSS4 grade rubber was quoted lower, around Rs.126.50 a kg. The daily reference price of the Rubber Board dipped to Rs.13055 per 100 kg. Steep plunge in crude oil prices too hurt the sentiments. In the meantime, natural rubber is seen elongating losses in the major overseas market on Thursday. Amidst weak crude oil prices, concerns over demand from China weighed on. China approving new standard for compound rubber which allows lesser natural rubber in the compound too hurt the markets.

MARKET NEWS

⊳China has approved a new standard for compound rubber that reduces the amount of natural rubber allowed in the formula. The new standard, which will cap natural rubber content in the compound to 88 per cent, down from 95-99.5 per cent previously, will be implemented on 01 July.

⊳According to International Rubber Study Group, global natural rubber demand in 2015 is anticipated to increase 3.1 per cent to 12.3 million tonnes.

⊳Thai Prime Minister says government trying to boost natural rubber prices to 65 baht a kg without providing details on ways to prop-up prices.

⊳Natural rubber production in India tumbled 36 per cent in December to 63000 tonnes on YoY basis. Consumption declined as well by 1.8 per cent to 83500 tonnes while imports rose 8.0 per cent during the same time.

⊳Crude rubber inventories at Japanese ports stood at 12,987 tonnes as of Dec. 20, up 15.1 pct from 10 days earlier, data from the Rubber Trade Association of Japan showed.

⊳According to Union Commerce Minister the period for the export of rubber imported under the advanced licensing system has been reduced to six months from the earlier 18 months.

⊳According to media reports, tyre companies have procured about 2400 tonnes of rubber under the new formula implemented by the State government recently.

⊳Monsoon floods seen curbing Malaysian natural rubber output and expects 2015 natural rubber production to be at 700000 tonnes.

⊳According to International Rubber Consortium, natural rubber production from Malaysia and Thailand is to drop at least 30 per cent if floods in Northern Malaysia and Southern Thailand persist.

TECHNICAL COMMENTRY

RUBBER Feb NMCE

Slippage past 12500 saw a deep liquidation towards 12100 ranges in the previous session. For the day, as long as support at 12100 holds downside, pullbacks are likely to 12550 or more. However, a break below the same could take prices further lower to 11900.

Source: Geofin Comtrade