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RUBBER FUTURES BOUNCES INTO BULL MARKET

[vc_row][vc_column width="1/1"][vc_column_text]By Ibrahim Patel Mumbai: In a bid to bottom out, the global price of natural rubber, leading producers and exporters has joined hands to bring discipline in the export market. This organization of eight companies has been formed under the leadership of Sri Trang Agro Industries and Halkyon Agri Corp at Thailand.  As exporters moved together to boost prices, investors rushed to buy back the futures in the Singapore Commodity Exchange (SICOM), Shanghai Commodity Exchange and Tokyo Rubber Exchange. The Thai Rubber Association has stated that the exporters of Thailand and Indonesia decided not to renew agreements of dealers who supplying in SICOM from the beginning of the current month. Under the direct impact of this development, the benchmark SICOM contract has jumped 7 percent since a six-year low of $1.35 a kilogram hit in January, a level that was revisited on April 9, to close on Tuesday at $1.445. This is still 5.8 percent below the price at the start of the year and about a quarter of the record high reached in February 2011. With severe supply shortage in China, Shanghai futures rose by 2.7% to be at the new peak since 29 August and quoted at 14,580 Yuan ($2965 per ton). It has increased by 20% from the December bottom and thus entered in the bull market phase. However, given the all time high peak of February 2011, it is still 67 % lower. Tokyo rubber futures quoted at the peak of five weeks at 216.7 Yen ($1.28 per kilo). Taking into the consideration the loss factor, other producers along with the Thailand have leaded to apply cut on shipments and reduce sowing area. Inventories monitored by the Shanghai Futures Exchange slid 2.6 per cent last week to 134,309 tons, the lowest since October 2013 and a sixth weekly decline, exchange data showed. Currently, stock in the Chinese tire market is also at the bottom. Rubber 04-30-15According to analyst several end users and dealers of rubber were oversold in futures since last few months. Now, such players are forced to look for the available raw material in the spot market. As per the Chinese customs data, rubber import during March increased by 24 % as compared to February to beat 220,444 ton. At Thailand spot market prices rose by 2.6% at a new peak since 16 December and quoted at 57.25 Baht FOB Bangkok per kilo. Sri Trang Industries and other producers have planned to increase rubber prices during second half. Some of them have decided to delivery directly to consumers instead of giving it in the SICOM futures system. Sri Trang has said that SICOM futures prices now didn’t show the real prices of rubber cost of production. So we all have stopped giving delivery to SICOM. It is likely that the liquidity in Singapore Exchange may be reduced due to this development. Some tire producers believe that the decision taken by rubber producers and exporters doesn’t mean that they would get higher prices as demanded by them. Major tire producers would try to obtain rubber from other source of suppliers. [Courtesy - www.commoditydna.com]
About Author Ibrahim Patel is well-experienced commodity & currency expert. He has writing experience in the field since 35 years. He is working in Sandesh Gujarati newspaper and also editor of www.commoditydna.com. He had vast experience in analysis of trends in comodity markets in Vyapar, a commercial newspaper from Mumbai.[/vc_column_text][/vc_column][/vc_row]

About Sanjay Trivedi

Sanjay Trivedi is honorary editor of Asia Times. He is senior Indian Journalist having vast experience of 25 years. He worked in Janmabhoomi, Vyapar, Divya Bhaskar etc. newspapers and TV9 Channel as well as www.news4education.com. He also served as Media Officer in Gujarat Technological University.

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