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 12000 daily reference price by rubber board was quoted higher at INR 12915. 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 11500 12200 in the coming few sessions. Price Range Bias 11500 12200 Mixed Consider below mentioned strategy Filled on Position Entry Objective Stop Loss Sell INR 12000 INR 11600 INR 12350 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 216899 203555 6.56% improve the investors confidence Two wheelers 1458634 1434412 1.69% about demand outlook. Passenger Three wheelers 53399 48050 11.13% vehicle sales drove the vehicle sales Commercial higher with a steady growth 6.5% 52833 51674 2.24% vehicles along with positive growth in three wheeler sales. Further marginal Total sales 1781765 1737691 2.54% 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: +91 40 33404040 E mail: services@transgraph.com Internet: www.transgraph.com
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 27006 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 2014 15 total NR production stood at 517,000 tons, 17.3% lower compared to same period in FY 2013 14. 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 52.9. 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 11746 during last session.
The sharp fall from INR 12870 has found support at INR 11625 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 11625 initially and after minor bounce price may continue towards the swing low of INR 11200 levels. The sharp bounce from INR 11150 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 11200 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 11625 followed by INR 11200. On the upside, INR 12350 12500 could act as resistance. Concisely, prices are likely to consolidate in the range of INR 11500 12100 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) 130 120 110 100 90 80 70 Mar'15 Feb'15 101 150 100 50 0 Apr'15 Mar'15 79 500 400 300 200 100 May'15 Apr'15 358 RSS4 Kottayam ISNR 20 Spot Spread (INR/Kg) Synthetic rubber (JSR) Delhi spot (Naked) prices (INR/Kg) USD/JPY 2600 200 118.5 2400 2200 2000 1800 2515 180 160 140 180 1/16 1/19 1/27 1/30 118.0 117.5 117.0 117.6 USD/THB USD/MYR USD/IDR 32.8 32.7 32.6 32.5 32.4 32.59 3.616 12700 12650 12600 12550 12500 12682
USD/INR RSS4 Kottayam RSS3 Bangkok Import Parities (INR/Kg) ISNR 20 SIR 20 Indonesia Import Parities (INR/Kg) 62.20 62.00 61.80 61.60 61.40 61.20 61.59 23.5 23.0 22.5 22.0 21.5 23.27 1/28 1/29 1/30 2/2 10.00 8.00 6.00 4.00 2.00 27.97 1/28 1/29 1/30 2/2 Crude oil prices (US $/Barrel) NMCE Forward Curve (INR/Qtl) RSS4 Kottayam Ave Prices Historical (INR/Kg) 50 48 46 44 42 47.04 12200 12000 11800 11600 11400 12036 11926 11847 12100 Feb'15 Mar'15 Apr'15 May'15 20000 15000 10000 5000 16893 14,370 13262. 12823 Spot Prices Grade Market Feb 03 2015 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 03 2015 RSS4 Kottayam 12915 (185) RSS5 Kottayam 10800 ( 100) ISNR 20 Kottayam 10400 ( 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 15 11890 11895 11731 11746 11818 72 480 1096 Mar 15 NA 11995 12002 11835 11847 11936 89 892 1312 Apr 15 12075 12140 11900 11926 12012 86 204 196
TOCOM RSS3 (Yen/kg) Jun 15 Day 205 208.1 205 206.5 3.4(203.1) 205 Electronic 203.3 208.1 203.3 206.5 3.4(203.1) 203.3 Jul 15 Day 204 206.5 203.6 204.8 2.5(202.3) 204 Electronic 202.9 206.5 202.5 204.8 2.5(202.3) 202.9 Lot size: NMCE 1 lot= 1 ton, Tocom 1 lot = 5 tons 12523 29035 Expiry Closing Prices Feb 15 Mar 15 Apr 15 RSS4 Kottayam Spot 12915 1169 1068 989 Feb 15 11746 101 180 Mar 15 11847 79 Apr 15 11926
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