[Geofin Comtrade] Daily report on Natural Rubber: January 9, 2015

MARKET COMMENTARY

⊳Natural rubber stayed under pressure. On Thursday, directionless moves were witnessed in the futures segment following the decline from the three week highs while RSS4 in the physical market plunged to Rs.123 a kg. Daily reference price published by Rubber Boards dipped as well. Weakness in the major overseas market coupled with concerns over demand weighed on overall market sentiments.

⊳ As the week’s session culminates, a mixed trend is being witnessed in natural rubber prices in the international market. TOCOM rubber futures edged up while SHFE and AFET rubber futures are seen stretching losses. While caution prevailed in the market ahead of key employment data from the US, gains in crude oil improved the sentiments.

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

As long as support at 12100 is held downside pullback to 12550/12700 ranges are likely. However, slippage past the same with considerable volumes opens the possibility of another round of liquidation towards 11900 or more.

Source: Geofin Comtrade