Summer rain in the producing states like Kerala is one factor that could dampen the global bullish cues.
Contrary to the grim forecast by ANRPC (Association of Natural Rubber Producing Countries), natural rubber (NR) price in India has looked up this week, on cues from Opec’s (Organisation of Petroleum Exporting Countries) decision to cut crude output. On ICEX (Indian Commodity Exchange), the April rubber contract has almost hit initial upper limit, touching Rs 118 per kg on Monday, where it was expected to fall below Rs 100 per kg.
TOCOM Rubber futures rose to a one-week high on Tuesday, on signs of a slowdown in coronavirus-related deaths and new cases in global business centres, including Italy and New York and ICEX has followed suit. Kuala Lumpur -based ANRPC, in its latest issue of ‘NR Trends and Statistics’ bulletin, had predicted 8.2% fall in global NR demand in April.
“Rubber closed sharply up, at Rs 118.11 (per kg) on Monday following crude, after the Opec called an urgent meeting on Monday to discuss oil output cuts. NR may trend higher to test resistance in the zone of Rs 119.50-121.50 (per kg) on higher oil prices and a break above this level could see prices even test Rs 124-125 (per kg) in the coming week,” Akshay Agarwal, MD, Acumen Capital told FE. Analysts see a close positive co-relation between NR price and crude oil prices.
But the lack of physical demand, may not sustain the price rally of NR, Agarwal hastens to add.
Spot trading continues to remain closed, due to the nationwide lockdown.
Summer rain in the producing states like Kerala is one factor that could dampen the global bullish cues. And on Tuesday, the rosy price trend at ICEX has slightly subdued in the April rubber contract from Rs 118 per kg on the previous day to Rs 116.9 per kg.
Ajay Kedia (Director, Kedia Advisory) attributes the tiny dip in bullishness to the traders cutting some long positions, ahead of staggered delivery period, that starts on Wednesday. Quoting traders in Kottayam, Kedia says that taking delivery may not be viable, in the medium term.
Right before the lock down, traders had stocked up in anticipation of demand on reports that trade in China was bracing up to the pre-Corona normal by second half of March. Each dealer is stuck with at least 50 tonne RSS-4 premium grade sheets in his godown, with a collective inventory roughly worth Rs 300 crore.