[Geofin Comtrade] Daily report on Natural Rubber: January 15, 2015

MARKET COMMENTARY

Weakness prevailed in the natural rubber in the local as well as in the overseas market. On Wednesday, while NMCE exchange stayed closed on account of Uttarayan, RSS4 grade rubber declined in the physical market tracking steep slump in the major overseas market and on poor demand. The grade was quoted as low as Rs.115 a kg though the activities in the market were sluggish. In the mean time, on Thursday, natural rubber took a breather from the previous session declines in the international market. TOCOM and AFET rubber futures bounced back while SHFE stayed in red. Overnight gains in crude oil prices improved the sentiments though worries over demand following a weak global economic outlook weighed on.

MARKET NEWS

⊳Kerala Chief Minister and Opposition Leader submitted a memorandum before the Prime Minister, urging the latter to take necessary steps to solve the problems faced by rubber sector.

⊳Rubber inventories in the warehouses monitored by SHFE rose 1250 tonnes to 151585 tonnes last week.

⊳According to International Rubber Study Group, global production of natural rubber is to exceed consumption by 77,000 mt this year before narrowing to 51,000 mt in 2016.

⊳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.

TECHNICAL COMMENTRY

RUBBER Feb NMCE

With major supports being breached, there exist weakness. However, pullbacks to 12100/12320 ranges cannot be ruled out before resuming its downtrend. An unexpected rise past 12450 ranges could bring about some buying. Slippage past 11850 will intensify weakness.

Source: Geofin Comtrade