Medium Term Price Outlook_Natural Rubber_2nd Automotive Workshop Presentation_26june12

7/31/2019 Medium Term Price Outlook_Natural Rubber_2nd Automotive Workshop Presentation_26june12

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NATURAL RUBBER

1


2/27

TransGraph Consulting Pvt Ltd Slide

Flow of Presentation

Fundamental Summary

Indian:

NR price review

NR Dynamics in May12

Productive acreage increments for 12/13

Indian NR Production Scenario

Indian NR Consumption Scenario

Fuel Policy

South west monsoon & progress

Indian NR trade

NR Balance sheet till 12/13

Global:

NR price review

Productive acreages for 2012

Global NR Production scenario

El-Nino Dynamics

Global NR Consumption scenario

China NR & Demand dynamics

NR Balance sheet till 2012

Technical Analysis

Price Outlook Summary

2


3/27


Fundamental Summary

3

Price drivers Impact Weightage%

Score (1-5)

Indian

Summary

Slow down in Automobile demand Marginal Bearish 20% 2

Y-o-Y higher NR production by 5.3% Marginal Bearish 20% 2

Weak global economic cues Marginal Bearish 20% 2

Speculation over Strengthening El-Nino

phenomenaMarginal Bullish 40% 4

Indexed Score 2.8

GlobalSummary

Higher supply months from July12 Marginal Bearish 20% 2

Worsening Euro zone crisis Marginal Bearish 20% 2

Price sensitive Chinese buying Marginal Bearish 20% 2

Speculation over Strengthening El-Nino

phenomenaMarginal Bullish 40% 4

Indexed Score 2.8

Index score (1-5, 3:consolidation, 1&2:bearish, 4&5:bullish)


4/27

Indian NR Dynamics

4


5/27


NR Price review

5

Indian NR prices continued to slide owing to

persistent weakness in international prices

Aggressive losses are arrested due to weak USD/INR

weighing on the import parities

In the wake of emerging Import opportunities for tire

makers, domestic NR prices came under pressure due

to widening spreads

Farmers are slowly releasing the stocks which are

held at lower prices in the last few months


6/27


NR Dynamics in May12

6

May12 NR imports remained higher by 13% due to higher domestic prices in Apr12

Prior to this, Apr12 NR imports remained higher by 169% due to advance deals made in Nov-Dec11

Car sales grew by a mere 2.8% reflecting weak demand amidst rising fuel prices

Indian government is mulling over imposing additional excise duty on the diesel cars

In this context, SIAM might revise the car sales projections from 10-12 % to 3-4% in the coming

months


7/27 TransGraph Consulting Pvt Ltd Slide

Productive acreage increments for 12/13

7

Lower prices led marginal growth in new and re-plantation during 2005-07 (54.2 th.Ha) and areexpected to become productive during 2012-13. However rising re-plantation activity from past fewyears (with rising prices) might limit the new productive acreage to near 20 th.Ha for 12/13.


8/27 TransGraph Consulting Pvt Ltd Slide 8

Indian NR production scenario

Incremental acreages in the period from 2004-06 coupled with favorable weather resulted in higherNR production by 4.3% in 2011-12 season.

Moving ahead, NR production for 2012-13 period is likely to remain higher by 5.3% owing to higheracreages & anticipated favorable weather conditions.

However, lingering concerns on the El-Nino are likely to keep the production dynamics ontenterhooks in the 2nd quarter of the season.

In addition to this, any aggressive price losses might influence the farmers to trim the supplies andmight weigh on the production at the same time.

1.76

2.16

2.91

2.18

1.99

2.28

2.94

2.28

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50

AMJ'11

JAS'11

OND'11

JFM'12

AMJ'12 E

JAS'12 E

OND'12 E

JFM'13 E

Indian NR Production (Figures in lakh ton)

7.127.50

8.028.52 8.25

8.64 8.32 8.628.99

9.49

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

P roduction ( In L akh tons) % c hange

Indian NR production trends ( Figures in lakh ton)



Indian NR consumption scenario

In 2011-12,Indian NR consumption posted a marginalgrowth of 1.8 % from the previous year.

NR consumption in 2012-13 is expected to show a

marginal growth of 2.5% While automobile sales remained weaker in the first

two months of 2012 , revision in the forecast of carsales is anticipated in the coming months.

Anticipated slow down in the GDP is also expected tokeep the sentiment on a weaker note in the comingmonths.

6.386.95 7.20

7.55 8.018.20 8.61

8.729.31 9.49 9.66

9.9

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0.00

2.00

4.00

6.00

8.00

10.00

12.00

Co nsump tion (In L akh ton s) % c han ge

Indian NR consumption trends ( Figures in lakh ton)

2.432

2.323

2.429

2.483

2.49

2.38

2.49

2.54

2.200 2.250 2.300 2.350 2.400 2.450 2.500 2.550 2.600

AMJ'11

JAS'11

OND'11

JFM'12

AMJ'12 E

JAS'12 E

OND'12 E

JFM'13 E

Indian NR Consumption (Figures in lakh ton)

2.71%

9.11%

7.55%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

0

50

100

150

200

250

Cars commercial vehicles passenger vehicles

May'11 May'12 % Change

Indian Automobile Sales -May'11 Vs May'12



Fuel Policy

10

6.20%

7.60%

10.70%

5.60%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

11.00%

12.00%

2010-11 2011-12

Diesel Petrol

Consumption growth in india-Petrol Vs Diesel

15.0

25.0

35.0

45.0

55.0

65.0

75.0

2 00 2 2 00 3 2 00 4 2 00 5 2 00 6 2 00 7 2 00 8 2 00 9 2 01 0 2 01 1 2 01 2

Diesel Petrol

Historical Fuel Prices

Government of India is mulling over imposing additional excise duty on diesel cars due to incremental diesel

consumption in 2011-12

With petrol prices going up, government is planning to curtail the subsidy advantage taken by the diesel carowners

In the case of levy of additional duty, small diesel car prices could soon rise by Rs 1.7 lakh while medium-to-

large guzzlers could become costlier by Rs 2.55 lakh a piece.

Automobile sales would come under further pressure in case of levy of additional duty on diesel cars



South west monsoon & Progress

11

70

75

80

85

90

95

100

105

110

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Actual Rainfall IMD Forecasted Rainfall average

Indian Monsoon - Actual Vs official Forecast

South west monsoon arrived in India with a delay of 5 days

raising questions on the predictions of Indian meteorological

department.

Kerala rainfall stood lower by 55% from the actual precipitation

for the period 1st june-13thJune12.In this context, concerns over El-Nino are expected to amplify in

the coming weeks.

However, meteorological department have been maintaining

that El-Nino can be confirmed only by the end ofJune12.

Historical analysis depicts a huge variation from the actual Vs

IMD forecast.

In the event of El-Nino, NR prices are likely to stabilize and may

not witness aggressive losses here after.

Source:IMD



Indian NR trade

Domestic NR prices are expected to be closelyguided by the international prices in the comingmonths.

While tire makers are taking advantage of the lower

international prices, aggressive rise in domesticprices might not sustain in the long run.

Higher NR imports in 2011-12 is expected to keepthe inventories on a decent note going forward.

Anticipated slowdown in automobile demand atglobal & domestic front is expected to result innarrow down of P-C gap in FY 2012.

-200.0

-150.0

-100.0

-50.0

0.0

50.0

100.0

150.0

200.0

250.0

03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12E 12-13F

Net Trade Exports Imports

IndianNR trade scenario ('000 ton)

-13.00%

-11.00%

-9.00%

-7.00%

-5.00%

-3.00%

-1.00%

1.00%

3.00%

5.00%

04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12E 12-13F

india

Global

P-C gap as % of NR production

-30.00

-20.00

-10.00

0.00

10.00

20.00

30.00

40.00

Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12

Import Price parities-Rss-4 Kottayam Vs Rss-3 Bangkok ( INR/Kg)

Correctionin domestic

prices due to decline in

international NR prices



Indian NR Balance sheet till 12/13

Ending stocks in 2012-13 are expected to further increase to 43 % in the wake of incremental productionand stagnant consumption pattern.

Tire makers are expected to import NR in the current year due to quality concenrs of the domestic NR.

However, on going El-Nino concerns would continue to keep the NR production dynamics on a highlyvolatile in the coming months.

Attribute 10-11 11-12 12-13F

Beginning stocks 2.14 2.85 3.96Production 8.62 8.99 9.49

% Change 3.60% 4.29% 5.56%

Imports 1.88 2.05 1.2

Total supply 12.64 13.89 14.65

Consumption 9.49 9.65 9.9

% Change 1.90% 1.69% 2.59%

Exports 0.3 0.28 0.35

Total demand 9.79 9.93 10.25

Ending Stocks 2.85 3.96 4.4

S/C ratio 29.11% 39.88% 42.93%

No of weeks consumption 15.14 20.74 22.32

Source: IRSG, TG Estimates, All units in Lakh tons


14/27

Global NR Dynamics

14



International NR Price review

15

200

250

300

350

400

450

Rss 3 Bangko k ( US ce nts/Kg) TOCOM ( Ye n/Kg)

Weak economic indicators

& Optimism over Higher NRsupplies from July'12

NR price movement

42

44

46

48

50

52

54

56

Jan-12 Feb-12 Mar-12 Apr-12 May-12

US EU China

PMI index

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Thailand Indonesia Malaysia India Vietnam

NR Production Seasonality Poor economic indicators across the major NR

consuming economies like China kept the over all

sentiment on grim note

While NR production is going in to seasonally highersupply months, optimism over availability of the

produce also prevailed in the markets

Except Indonesia, NR production in all the other major

production countries is bound to increase from July and

reach its peak in Dec month

In Indonesia, NR production remains more or less

steady through out the year



Lower prices during 2003-05 period led tomarginal growth in new plantations during 2004-

05, which in turn will lead to marginal rise inproductive acreages till 2012.

Meanwhile, Pace of new plantings was rising till2008 and then declined, following economicdownturn, however, enduring lower prices mightrestrict aggressive rise in new plantations during2012.

Global NR productive acreage increments for 2012



Global NR production scenario

NR Production in 2011 has gone up by 5.5% from the previous year.

While NR production in 2012 is expected to post a slightly lower growth of 3.2% ,the same is attributed to prevailinglower prices which might influence the farmers to trim the supplies.

However, Global meteorological departments are hinting at strengthening of El-Nino phenomena which mightpotentially weigh on the production prospects moving forward.

While prominence over El-Nino emergence is expected to grow in the ensuing period, production dynamics mightremain on tenterhooks moving ahead.

2.59

2.49

3.00

2.90

2.72

2.49

3.17

2.94

2.00 2.20 2.40 2.60 2.80 3.00 3.20

JFM'11

AMJ'11

JAS'11

OND'11

JFM'12

AMJ'12

JAS'12

OND'12

Global NR production Scenario (Million Tons)

Source: IRSG, TG Analytics

7.02 7.4

8.7

8.99.7 9.8 10.13 9.69

10.410.97 11.32

-10%

-5%

0%

5%

10%

15%

20%

0

2

4

6

8

10

12

2002 2003 2004 2005 2006 2007 2008 2009 2010 20112012F

Production in million ton % Change

Global Production Trends ( Million ton)

Source:IRSG &TG estimates



Global NR consumption scenario

Owing to lingering concerns on debt troubles at world major economies coupled with dwindling

Chinese demand, global NR consumption in 2011 stood at a mere 1.4% vis--vis 15.4% in theprevious year.

Amidst Grim economic outlook at major global economies coupled with unresolved Euro zonedebt crisis,NR consumption is expected to show a nominal growth 2.6 % in 2012.

7.41 7.768.24

9.08 9.2210.14 10.17

9.33

10.77 10.9211.20

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

0

2

4

6

8

10

12

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F

consumption % Change

Global NR consumption trends ( Million ton)

2.55

2.73

2.89

2.74

2.46

2.69

2.91

3.14

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50

JFM'11

AMJ'11

JAS'11

OND'11

JFM'12

AMJ'12

JAS'12

OND'12

Source : IRSG, TG Analytics

Global NR consumption Trends ( Million ton )



-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

0.00

2.00

4.00

6.00

8.00

10.00

12.0014.00

16.00

18.00

20.00

Jan Feb Mar Apr May

2011 2012 % Change

China Automobile sales ( Lakh Units)

China NR & Demand Dynamics

9.709.50

9.108.90

8.10

7.00

7.50

8.00

8.50

9.00

9.50

10.00

Q1-11 Q2-11 Q3-11 Q4-11 Q1-12

China GDP growth

7.7

8.2

7.4

7.5

7.6

7.7

7.8

7.9

8

8.1

8.2

8.3

2011 2012

China NR imports - Jan-May ( lakh ton)

Chinas GDP growth slowed down during the first quarter

of 2012 owing to prevalent macro economic concerns.

On the other hand, Chinese automobile sales have shown a

growth of 16% in May12 Vis-a-vis corresponding period of

the previous year.While china NR imports remained higher by 7.4 % between

Jan-May12 period, value of the goods have shown a decline

by about 21.7% due to lower prices in the last two quarters.

It is to be understood that the Chinese have remained

primarily price sensitive and are expected to remain so in

the coming weeks due to anticipated slow down in the

domestic & global automobile demand.


20/27

TransGraph Consulting Pvt Ltd Slide 20

Global Balance sheet till 2012

Incremental tapping area in 2004-06 resulted in higher NR production by 5.5% in 2011,NRconsumption is posted a nominal growth of 1.3 % at the same time due to Global economicslowdown.

While macro economic concerns are expected to weigh on the demand, consumption isexpected to remain stagnant in 2012.

With the expected NR consumption likely to post a nominal growth, ending stocks areexpected to remain slightly higher In 2012.

However, production dynamics are to be closely monitored in the wake of growing El-Ninoconcerns across the globe.

Variable 2010 2011 2012F

Beginning Stocks 1.92 1.54 1.59Production 10.4 10.97 11.32

% change 7.33% 5.5% 3.2%

Total Supply 12.32 12.51 12.91

Consumption 10.78 10.92 11.2

% change 13.65% 1.30% 2.56%

Ending stocks 1.54 1.59 1.71

S/C Ratio 14.29% 14.56% 15.27%

No of weeks of

consumption 7.43 7.57 7.94Source: IRSG, TG Estimates, All units in Million tons


21/27

Technical Analysis

21


22/27


RSS4 Kottayam Spot prices are witnessing second leg of decline as Intermediate wave X' with in

W-X-Y correction after culminating Intermediate wave X at INR 20100 during Apr.12, currently

hovering at INR 18500 Per Quintal. Prices are progressing lower towards INR 17100 in the

nature of minor wave A of Intermediate Wave Y of Primary Wave 2 with resistance in place

around INR 19550 in coming month.

RSS 4 Kottayam Elliott wave applied


23/27


RSS3Bangkok - Elliott wave applied

RSS3 FOB Spot Bangkok prices are progressing in the nature of Intermediate wave Y of W-X-Y

Correction in the nature of Primary wave 2 after culminating minor wave B of Intermediate

wave Y at 430 cents during Feb12, currently hovering at 340 cents. Presently, prices are

progressing lower in the nature of minor wave C of intermediate wave Y, the target of the

same is JPY 250-230 cents in the coming 3 4 months.


24/27


TOCOM Rubber Futures Elliott wave applied

TOCOM RSS3 Futures prices are progressing in the nature of minor wave C of Intermediate Wave

Y within W-X-Y correction of the Primary wave 1 after culminating minor wave B of Intermediate

wave Y at JPY 344.4 during Feb12, currently hovering at JPY 246.30. Prices are progressing lower

towards JPY 190 in the nature of intermediate wave Y of Primary wave 2 with resistance in place

at JPY 302 in coming 3-4 months.


25/27


Price Outlook Summary

Markets Last Closing(June 14th,

2012)Price Direction Price outlook

(1-2 months)

RSS3 Bangkok spot,US Cents/Kg

345

Prices are likely to drift lowertowards 300-290 cents with

resistance in place at 385

cents.

300 290

RSS4 KottayamSpot, INR/Qtl

18500Prices are likely to drift lowertowards INR 17000 with

resistance in place at 19500.17300-17000

TOCOM RSS 3Futures Cont, JY/Kg

243.4

Prices are likely to drift lowertowards 200-190 cents with

resistance in place at 302

cents.

220200


26/27

Thanking you for your attention.

TransGraph Consulting Private Limited6-3-655 / 2 / 1, A.P. Civil Supplies Bhavan Lane, Somajiguda,

Hyderabad - 500 082, India.

+91-40-30685000

(4 lines)

[email protected]

[email protected] www.transgraph.com

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27/27

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Medium Term Price Outlook_Natural Rubber_2nd Automotive Workshop Presentation_26june12

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