Daily Rubber Report - Aug 3, 2015

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Aug 3, 2015

Daily Rubber Report Analyst: Muhammad Waqar | Email: [email protected]

1. Overview of Natural Rubber Market Indices

Percentage Price Change

Market NR Grade Contract Price Unit Daily Weekly Monthly Quarterly Yearly

Tocom RSS3 Jan-16 198.0 Yen/Kg -2.65% -2.75% -9.67% -10.12% -4.81%

SHFE RSS3 Jan-16 12415 Yuan/ton -2.21% -0.32% -6.86% -6.12% -19.07%

MRE SMR10 Spot 136.55 Cents/Kg -2.53% -2.15% -8.81% -5.57% -20.03%

Vietnam SVR10 Spot 132.45 Cents/Kg -2.53% -2.15% -8.81% -5.57% -20.03%

2. Prices of Synthetic Rubbers

Type Grade Contract Price Unit

SBR 1502 FCA OMSK Russia Awaited from supplier USD/ton



PBR Low-CIS CFR Asia NE 1450-1580 USD/ton

PBR Low-CIS CFR Asia SE 1550-1600 USD/ton

PBR High-CIS CFR Asia NE 1250-1380 USD/ton

PBR High-CIS CFR Asia SE 1350-1400 USD/ton

BK 1675 CPT St Petersburg, Russia Awaited from supplier USD/ton

3. Price Movement Of Relevant Commodities/Materials

Percentage Price Change

Commodity/ Monomer

Name Contract Price Unit Daily Weekly Monthly Quarterly Yearly

Crude Oil WTI Front month 46.41 USD/bbl -0.77% -1.21% -17.86% -21.68% -52.84%

Styrene SM CFR Japan 1195 USD/ton 0.00% 0.00% -7.36% -13.41% -26.91%

Butadiene BD CFR China 950 USD/ton 0.00% -10.80% -31.41% -12.44% -36.45%

DAILLY RUBBER REPORT 08/03/2015

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4. Review of Rubber Markets Today

Natural rubber took a hit today in the international markets following a fresh decline in crude oil prices,

taking WTI to a four-month low. Chinese official PMI data dropping to 50 for July, from 50.2 in June also

dampened sentiments on demand. Natural rubber fell more than 2% on TOCOM, Shanghai Futures

Exchange and Malaysian Rubber Exchange.

5. Short-term Perspective

Natural rubber is expected to keep tracking changes in the price of crude oil. A fresh statement by Iranian

Oil Minister promising a 0.5m bpd output rise right after sanctions are lifted, and taking the rise in

production to 1m bpd within months thereafter, has raised new concerns over the oil glut in international

markets. Weakness in demand from China also weighs on rubber prices. Furthermore, US labor department

is about to release jobs data on Friday. The expectations of healthy employment figures is expected to

keep natural rubber prices depressed this week.

6. Today’s Market News

Oil hits multi-month lows on record OPEC output, weak China data: WTI fell to lowest in 4 months

as OPEC made record high production in July in recent history according to a Reuters survey.

Furthermore, Iran oil minister said the country expects to raise production by half a million bpd as

soon as sanctions are lifted, and by one million bpd, within months thereafter. (Reuters – Aug 3,

2015)

Weekly data from SHFE showed natural rubber inventories in the warehouses monitored by

it rising three per cent to 182714 ton. (Shanghai Futures Exchange – Aug 3, 2015)

US jobs report likely to confirm Fed interest rate rise decision: Non-farm payrolls are expected to

have risen by over 225,000 in July, marginally higher than the rise in June, while annual growth in

hourly earnings should also tick higher, close to 2.5 per cent. The unemployment rate is expected

to remain stable at 5.3 per cent in July. (Financial Times - Aug 3, 2015)

Oversupply likely to plague VN’s rubber industry for years: Speaking on the sidelines of Vietnam

Rubber Association’s fourth congress held in HCM City last Friday, Tran Ngoc Thuan, chairman of

the association, said global rubber demand has only increased slightly in recent years, but supply

has shot up, pushing prices down. He also stressed the need for exporting less of raw rubber output

and processing it for making the finished product. (Vietnam News – Aug 3, 2015)

Malaysia: Rubber Market to Trade Cautiously Next Week: The Malaysian rubber market is expected

to trade cautiously next week against the backdrop of volatile currency movements and declining

crude oil prices, dealers said. For the week just-ended, rubber prices were mostly lower due to weak

buying support. (Bernama – Aug 3, 2015)

SM plant likely to be taken off-stream by SCG-Dow: SCG-Dow Chemical is likely to take off-stream

its styrene monomer (SM) plant for maintenance turnaround. A Polymerupdate source in Thailand

informed that the plant is planned to be taken off-stream in Q1, 2016. It is likely to remain off-

stream for around one month. Located in Thailand, the plant has a production capacity of 175,000

mt/year. (Polymer Update – Jul 31, 2015)


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CFR China-FOB Korea butadiene spread turns negative on weak Chinese demand: The location

spread between CFR China and FOB Korea butadiene prices sank to a one-year low of minus

$30/mt Friday, as the Chinese market spirals down on weak demand, Platts data showed. The

spread was last lower on at minus $35/mt on July 3, 2014. CFR China butadiene price fell $45/mt

day on day to be assessed at $955/mt Friday, the lowest level since April 9, 2015, when the price

was assessed at $940/mt, while the FOB Korea price was assessed stable on day at $985/mt. (Platts

– Aug 3, 2015)

Michelin acquires second German wholesaler: Last year Michelin made news when it bought out

the parent company of Germany’s largest wholesaler, Ihle Baden-Baden AG, and now the French

tyre maker has increased its wholesale presence in Germany with the 100 per cent acquisition of

Meyer Lissendorf, a wholesaler with a strong car tyre focus. Michelin has not disclosed the purchase

price. (Tyre Press – Jul 31, 2015)

7. Feedback From IPC Internal Sources

NR from Vietnam: Following the recent fall in prices, the suppliers seem to be split into those who are

willing to lower prices accordingly, and those who aren’t. Current RSS3 FOB prices are in the range of

$1410 to $1440 per ton.

[Source: Ahmed Shabbir – Chief Officer, Vietnam]

Rubber in Pakistan: Local customers are making some enquiries despite an overall slowness in the market.

Current CFR Khi rates for RSS3 range between $1370 and $1450.

[Source: Manager, NR and Allied Chemicals]

NR and PBR Update on India: Received a customer bid for $1150/ton CFR Cochin for PBR. Customers, in

general, look confused about the price movement of rubber going forward. About Polyisoprene rubber

(SKI 3), which is being considered nearest substitute of natural rubber, most customers do not consider

this a feasible alternative to natural rubber.

[Source: Ms Shehla - Team Lead Sales]

In a meeting today.

[Source: Ms Rumaila, GM Sales]

Rubber Market in Europe, India, Far East and South America:

No new contact/query from customers today.

[Source: Mr Asim, GM Sales]

Received a few queries on polyisoprene rubber (SKI3) from Turkish customers. The necessary information

is being exchanged for furthering the possibility of the deal.

Natural Rubber FOB Prices at Hochiminh port/ Vietnam: Price unit. USD/Mt on Aug 3/2015

SVR3L $1410 5fcl

RSS3 $1445 5fcl

CV50 $1480 5fcl

CV60 $1460 5fcl

[Source: Mr Waheed - Team Lead NR Sales]


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8. Wisdom of the Crowd

*All prices are TOCOM Dec-2015 Futures rates in Yen/Kg for RSS3 Natural Rubber

Rubber Professional Role Estimate for Month-End

Price Price at Month-

Start

Dr Imtiaz Ahmed CEO 198 201.3

Dr Zahoo Ilahi Cheema MD N/A 201.3

Mr Faraz Ahmed Organizational Dev 192 201.3

Mrs Rumaila Kashif GM Sales 190 201.3

Ms Shehla Gul Team Lead, Sales 195 201.3

Mr Ehtesham Bashir Manager, Sales N/A 201.3

Mr Waheed Yousuf Team Lead, Sales 209.5 201.3

Mr Ahmed Shabbir Chief Officer, Vietnam 210 201.3

Mr Ali Cheema Organizational Dev $197 201.3

Mr M Waqar Rubber Analyst 190 201.3

Average 8 197.69 201.3

Contact

Muhammad Waqar

Email: [email protected]

Disclaimer

The information contained in this report is intended only as a

reference. The author or International Petrochemicals Pvt. Ltd. (IPC)

bears no legal responsibility for the possible risks associated with

consulting this report.

Documents

Daily Rubber Report - Aug 3, 2015