Daily NMCE Rubber Price Outlook and Strategy

Transcription

1 Daily NMCE Rubber Price Outlook and Strategy Decision enabling market analysis & price outlook Market recap and Summary outlook for next 3 days NMCE RSS4 futures settled marginally lower on Tuesday after erasing the gains during early trade for second straight session indicating selling pressure in the market due to weakness in spot demand. Despite the lack of activity and spot prices quoted about INR daily reference price by rubber board was quoted higher at INR Further, surging imports also weighed on the investors sentiments while decline of production going into lean production period supported the prices and offset some of the bearish momentum. Going ahead, bearish sentiment in the market due to weakness in spot demand increasing imports are likely to be offset by the lower production during the lean production phase in coming months and keep prices in a tight range in the near term. Key drivers likely to impact in the coming sessions are: Marginal growth January auto sales Weakness in spot demand Declining domestic production rate Surging NR imports Positive trend in international NR prices Feb 04, 2015 Last closing as on Feb 03, 2015 Price outlook summary Price Range for next 5 days Strategy Review Trading Strategy Price outlook Summary NMCE RSS4 Feb 15: INR 11,746 ( 72.00) per Qtl Concisely, prices are likely to consolidate in the range of INR in the coming few sessions. Price Range Bias Mixed Consider below mentioned strategy Filled on Position Entry Objective Stop Loss Sell INR INR INR Fundamental Analysis Domestic automobiles sales in January are estimated to have increased by about 2.5% compared to same time last year Category Jan 15 Jan 14 YoY (%) despite withdrawal of tax sops and increase in prices which should Passenger vehicles % improve the investors confidence Two wheelers % about demand outlook. Passenger Three wheelers % vehicle sales drove the vehicle sales Commercial higher with a steady growth 6.5% % vehicles along with positive growth in three wheeler sales. Further marginal Total sales % growth in commercial vehicles and two wheelers affected the overall growth rate. Top auto maker Maruti along with Honda and Ford saw strong increase in sales while others including Hyundai saw marginal or negative growth in passenger vehicles segment. Discuss with our expert Phone: E mail: services@transgraph.com Internet:

2 Various rubber growers associations including the United Planters Association of Southern India have complained about tyre companies violating Kerala government s initiative of daily reference price by offering lower prices. Off take from the market is estimated to have declined in the past month with higher prices than market value resulting in overall weakness in markets. India s Tyre manufacturers association (ATMA) has urged the central government to address the inverted tax structure on rubber products in order boost the domestic manufacturing. Import duty on rubber is currently 20% while on finished goods like tyres it is only 5%, aggravating the demand concerns in the market. Meanwhile, imports also continued to surge negating the main benefit of Kerala government s agreement with tyre companies. India s NR imports in January stood at tons by the end of 28 th Jan 2015, about 31% higher than 20,603 tons of import during Jan 14. Continuing price disparity between international and domestic NR prices along with prior commitments with suppliers and demand for special grade rubber for heavy vehicle tyres is expected to have led to higher imports. On the other hand, domestic NR production is likely to decline in coming months as the peak production ends in January and production enters the lean phase. In the first nine months of FY total NR production stood at 517,000 tons, 17.3% lower compared to same period in FY Expectations of further supply decline amid current lower production conditions are likely to create tightness in market and lend inherent strength to prices limiting the downside potential. Amidst continued weakness in prices, Indian government s commerce ministry has established an expert committee to look into the problems relating rubber sector including fall in production and imports. Further, central government is also formulating national rubber policy amidst growing demand in auto sector which is likely to be tabled before budget session and is likely to improve investors confidence. On the economic front, India s manufacturing PMI data for January from signaled sustained growth in manufacturing activity with both output and new orders seen rising despite the decline of index falling from record 54.5 to Going ahead, acceleration in manufacturing sector is likely to support NR price gains. Technical outlook on NMCE Rubber NMCE Rubber Feb 15 futures prices have traded with negative momentum and closed at INR during last session.

3 The sharp fall from INR has found support at INR and the recovery in price was unable to surpass the middle band of Bollinger band during last week and resumed bearish momentum which could retest the momentum low of INR initially and after minor bounce price may continue towards the swing low of INR levels. The sharp bounce from INR is finding resistance with Fib s cluster zone at USD 12850, hence staying below INR 12850, the major bearish trend could impact and price likely to continue towards INR and even lower in the coming sessions. On the daily chart, momentum indicator MACD (12,26,9) making Hing formation which suggesting price fall in the coming session. On the down side, price likely to find support around INR followed by INR On the upside, INR could act as resistance. Concisely, prices are likely to consolidate in the range of INR in the coming few sessions. Mini Charts NMCE RSS4 Future Spread (INR/Qtl) NMCE RSS4 Future Spread (INR/Qtl) NMCE RSS4 Future Spread (INR/Qtl) Mar'15 Feb' Apr'15 Mar' May'15 Apr' RSS4 Kottayam ISNR 20 Spot Spread (INR/Kg) Synthetic rubber (JSR) Delhi spot (Naked) prices (INR/Kg) USD/JPY /16 1/19 1/27 1/ USD/THB USD/MYR USD/IDR

4 USD/INR RSS4 Kottayam RSS3 Bangkok Import Parities (INR/Kg) ISNR 20 SIR 20 Indonesia Import Parities (INR/Kg) /28 1/29 1/30 2/ /28 1/29 1/30 2/2 Crude oil prices (US $/Barrel) NMCE Forward Curve (INR/Qtl) RSS4 Kottayam Ave Prices Historical (INR/Kg) Feb'15 Mar'15 Apr'15 May' , Spot Prices Grade Market Feb Global Natural Rubber RSS 3, (THB/Kg) Bangkok 56.7 (0.75) STR 20, (US cents/kg) Bangkok 150 (1) SIR 20 (US cents/kg) Indonesia 167 (2) SMR 20, (US cents/kg) Malaysia 137 (0) Indian NR, Kottayam INR/Qtl Feb RSS4 Kottayam (185) RSS5 Kottayam ( 100) ISNR 20 Kottayam ( 100) Latex (60% drc) Kottayam 7925 (0) Figures in brackets indicate change from previous session. Futures Prices as on Feb 03, 2015 Exchange Contract Session Open High Low Close Previous close NMCE RSS 4 (INR /Qt) Change Total Volume Open Interest Feb Mar 15 NA Apr

5 TOCOM RSS3 (Yen/kg) Jun 15 Day (203.1) 205 Electronic (203.1) Jul 15 Day (202.3) 204 Electronic (202.3) Lot size: NMCE 1 lot= 1 ton, Tocom 1 lot = 5 tons Expiry Closing Prices Feb 15 Mar 15 Apr 15 RSS4 Kottayam Spot Feb Mar Apr

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