May 5, 2021

Rubber costs outlook: Rubber climbs 1-month peak; analysts see 9% upside: Time to take positions?



Costs of rubber, an industrial commodity, jumped on Tuesday to the very best degree in practically a month amid provide scarcity, including to a rebound that started final week as agency demand together with constructive cues within the worldwide market boosted sentiments of market members.
rubber futures due for supply on Might 31 traded 1.52 per cent (Rs 254) larger at Rs 17,010 per tonne, having touched Rs 17,050 per tonne earlier on Tuesday – a degree final seen on April 7.

Analysts mentioned the commodity is ready for larger ranges forward essentially on account of tight provides, because of demand from industries comparable to vehicles and healthcare.

“Elevated demand for rubber gloves and packaging tapes in the course of the pandemic has resulted in tightening of pure rubber provide… World rubber provide is already operating quick resulting from stockpiling by China, whereas US auto producers are speeding to safe shipments earlier than the market will get squeezed additional,” mentioned NS Ramaswamy, Head of Commodities at Ventura Securities.

India is the world’s second largest shopper of pure rubber, behind China, and the sixth largest producer.

Rubber costs have risen round 10 per cent to this point this yr and a few see upside potential of an extra 9 per cent going ahead.

Time to take positions?
Ajay Kedia, Founder and Director of Kedia Advisory, has a constructive outlook on pure rubber with the value set to check Rs 17,050-17,300 ranges within the subsequent one month.

Ramaswamy recommends shopping for the near-month contract above Rs 17,350 for a goal of Rs 18,500 with a cease loss at Rs 16,500. “Technically, we anticipate MCX rubber to commerce sideways over the following few weeks (Rs 17,350-Rs 15,500) with a potential breakout on both aspect,” he mentioned.

The street forward
Pure rubber is anticipated to commerce agency within the week forward, however disruptions on account of pandemic-related points can be tracked intently for cues, mentioned one analyst.

“Consecutive holidays in main worldwide pure rubber markets and key financial knowledge releases from the US and China will weigh on costs,” mentioned Anu V Pai, analysis analyst at

.

Market members will even monitor updates on manufacturing exercise keenly for cues on rubber costs. Analysts say any detrimental information from the sector could have an effect on demand for the commodity.

“A correction in crude oil charges would drag the rubber costs decrease,” mentioned Ventura’s Ramaswamy.

In the meantime, Brent futures traded greater than 1 per cent stronger at $68 a barrel eventually replace. The oil benchmark has appreciated 32 per cent to this point this yr.