|Offer Price (US Cents/Kg)|
|Tone Market: Rangebound|
|Latex In Bulk||Sellers||497.00|
Marzo 5 - marzo 7 Tire Technology Expo 2019 - Hannover, Alemania
Marzo 18 - marzo 19 World Rubber Summit 2019 - Singapore Expo, Singapur
Julio 24 - julio 26 Latin & Caribbean Tyre Expo 2019 - Centro de Convenciones Amador en Panamá.
Septiembre 10 – septiembre 12 IRC2019 - International Rubber Conference – Londres, Reino Unido
Octubre 7 – octubre 10 International Elastomer Conference 2019 – Cleveland, Ohio
Noviembre 11 – noviembre 15 XV Jornadas Latinoamericanas de Tecnología del Caucho – Querétaro, México
US auto makers are announcing a series of investments, and certainly not minor ones, that will see them restarting, expanding, and retooling existing plants, hiring more workers and boosting production.
China’s March dollar-denominated exports, expected at 7.3 percent up, were up 14.2 percent year on year. Dollar-denominated imports were down 7.6 percent where a decline of only 1.3 percent had been expected.
With Q1 now complete, China’s surplus with the US stands at $62.66 billion.
Trade talks are due to start next week US-Japan and also with the EU, whose profile according to a White House tweet is one of “a brutal trading partner”.
Mr. Trump says that it’s not “the right time” to be making economic deals with his friend Mr. Kim of North Korea. But does he still like him?
Shanghai paper up $3-day session, and $3-night session. Was better. Tocom broke upside resistance to close on RSS3 at $19 up, STR20 $4 up. SICOM RSS3 $5 to $27 up, TSR20 $9 to $18 up.
WTI crude $64.20/bbl, Brent $71.65/bbl.
Equities up all round but only the Dow noticeably so as Q1 earnings reports kicked off with banks up.
All-in-all for the rubber market, a satisfying week. By most accounts, it seems that some sort of agreement or ‘deal’ is due to be announced on the trade front between the US and China sometime over the next two months. Whether it holds is another matter as it will, apparently, require the establishment of ‘enforcement offices’, which doesn’t sound very trusting. Whatever the ultimate outcome, for now it’s seen by some in the markets as a positive sign for a pick-up in a wounded global economy. There are still optimists who see the Tripartite’s AETS as another source of strength for the market although it seems that pleading ‘mitigating circumstances’ by individual units, to avoid participation, works. It’ll be easy to check at the end of the year if exports are indeed lower on a twelve months basis. We’d bet against the possibility and would expect a flush to appear sometime around the start of the last quarter.
Let’s end the week with another positive signal for rubber. It may or may not materialize but at least it has potential and shows good faith and some optimism: we’re all recently aware that auto sales are lagging; in the US as well as in other areas and the North American market is still supposed to be part of a relatively strong economy. Worrying times, it seems. But are they really? It appears that the auto industry is more laid back about that particular hurdle. In a welcome move for suppliers, and certainly for economic development agencies around the USA, auto makers are announcing a series of investments, and certainly not minor ones, that will see them restarting, expanding, and retooling existing plants, hiring more workers and boosting production. Troubled? Maybe temporarily, but not for long. Meantime, without indexing it, social media is currently not short of an image or two of new teams of happy employees heading for a future in the tire industry.
If we can close an eye to its imports (not too easy for the rubber industry as it relies on those), which came in well below expectations, but putting the cart before the proverbial horse, China's March exports outdid their forecasts by a long chalk, much higher than expected, according to official customs data released Friday. March dollar-denominated exports, expected at 7.3 percent up, were up 14.2 percent year on year. Dollar-denominated imports were down 7.6 percent where a decline of only 1.3 percent had been expected. This would suggest that domestic demand remains weak as there’s a caveat to all this: analysts still suspect that the gains could be due more to seasonal factors than to a turnaround in sloppy global demand, shipments magnified by the recent and long Spring Festival holidays, which had negatively affected February’s business activity. Summing it up, China’s March trade surplus was $32.64 billion, where international expectations had been in a $6 to $7.05 billion range. Importantly, given the existing trade disagreement and its sensitivity on relationships, China's March trade surplus with the U.S. came in at $20.5 billion – or somewhat more than February’s $14.72 billion. With Q1 now complete, China’s surplus with the US stands at $62.66 billion. Might need more argument and talks but hopefully not as long and as many as needed by Brexit.
The world of trade and commerce, meantime, may not rejoice for too long as the White House still feels it needs to deal with a few more issues: they’ve not actually settled with their north-south neighbors as the USMCA ‘agreement’ still needs all three countries to ratify the deal. The southern Wall seems to be the hurdle, President Trump threatening 25 percent tariffs on Mexican cars and closure of the border if the country doesn’t deal with both migrants and drugs. Avoiding tactics running out of steam after two years, Japan needs to face up to its own trade issues with the US and its bilateral trade talks with Mr. Trump, these expected to start in Washington in the coming week. Will it have enough hotel rooms to accommodate all incoming supplicants? Japan’s PM Shinzo Abe can do without quotas or tariffs on Japan’s highly profitable auto exports but needs to acknowledge and bow to Mr. Trump’s ambitions on Japan’s agricultural market in order to reduce a $60 billion trade deficit. Relations with China, meanwhile, have improved substantially.
Not to forget Europe’s nail-biters. EU agriculture ministers are expected next week to confirm plans to open trade talks with the U.S. designed to counter the threat of American automotive tariffs. They obtained the green light Thursday from EU28 despite France’s saying that it’s still opposed to the talks both because they’re predicated on tariff threats and because the Washington has opted out of the Paris Climate Accord. Mr. Trump’s twitters see Europe as “a brutal trading partner” but with global growth slowing anyway, French Finance Minister Bruno Le Maire said Thursday that, “starting a trade war now between the U.S. and the European Union would be both a political and economic mistake.” Germany can certainly do without more frights as, tariff threats apart, its auto industry, the country’s biggest employer, is suffering from its self-imposed – or inflicted - transition from combustion to electric, both problematic and expensive. One could have advised a gradual and patient rather than ‘schnell’ approach.
In a world full of ‘deals’ that stubbornly refuse to accept indelible ink on paper, President Trump moved one of the potentials, that was never more than a diversionary PR exercise anyway, to the back-burner, saying on Thursday that it was not “the right time” to be making economic deals with North Korea, at the same time signaling that nuclear talks with Pyongyang hadn’t advanced since he’d gone walkabout on the Hanoi talks at the end of February. So? “At the right time I would have great support. This isn’t the right time.” North Korean media, meantime, has taken to referring to Mr. Kim as "supreme representative of all the Korean people," a new title. The ‘SR’ if of the opinion that the people who have burdened him with sanctions should be made to pay for the inconvenience.
No change reported in either climatic or trading conditions in Vietnam, bids largely missing, business, if any, routine for this time of year. Shanghai’s physical spot market was described as ‘warmer’ after China’s exports numbers release although maybe it should have been looking more closely at its imports, which were not really market-conducive. Consumers still tended to sit on their hands even though a number of them did attempt a little stock replenishment, long sellers preferring to wait in case of further advance, some traders keen to take a long position. Caution was seen in Singapore, where the Tire Majors continued to buy June and July rubber at over $1500 but with somewhat more reserve than of late, those buying earlier happy with a bargain, those who waited having to pay up as the market firmed into the weekend.
On rubber’s paper markets, Shanghai continued to disappoint, the other markets outpacing it, speculative buying stronger elsewhere than in its spiritual home. After adding just $3 to overnight levels on benchmark September during Friday’s day session, it looked to have taken some sort of injection early into the late session as it powered back up through the 12,000 yuan level, in fairly spirited trading, but ultimately ran out of steam, finally settling below it at just $3 up from the day session’s closing level. It probably wasn’t helped by its deliverable warehouse stocks tally increasing again, by 1,776 tons on the week. Tocom has left itself in an interesting position for the new week on its RSS3 contract, well-placed to make an attempt on its next upside resistance after closing above the current one at the 193.8-yen level. That’s if it has enough energy as Friday’s turnover was its worst in nine weeks, which could have been because Thailand was starting Songkran celebrations that go right through into the middle of next week. Benchmark September closed at $19 up, its upside resistance still at 195.7, 198.3 and 202.5-yen, downside support now at 187.2, 180.3, 173.3 and 150.0. It’s STR20 contract closed at just $4 up. SICOM made it a clean sweep on turnover volume for the week, doubling its closest exchange neighbor’s effort on its last day, RSS3 up $5 to $27, TSR20 $9 to $18, the spot grade differential at $190/ton, the sheet in a full-run backwardation of $20, the TSR20 at a $55 contango but its spot May still at an $8 premium over June having breached the $1550 level in the space of five working days. $10-a-Day Keeps the AETS Away? We don’t need the burden.
A crude oil analyst: "For its momentum to continue next week, WTI crude needs to close Friday above $64 a barrel and preferably break the resistance of $65 a barrel. Volume has been very strong throughout the week." Well, it might just make the minimum if it’s lucky but may have to wait a little longer for the higher number. A bagful of OPEC+ cuts, sanctions, and the latest Libyan conflict have seen crude’s value enhanced by over a third so far this year, the head of Libya's National Oil Corporation warning Friday that “renewed fighting could wipe out crude production in the country,” encouraging a string of forecasters into seeing “Brent and WTI prices averaging $75 per barrel and $67 per barrel respectively through the rest of this year, but risk is asymmetrically skewed to the upside," although any slip-up in the bull factors on the demand side, including the threat of the global economy continuing to decline, plus the fact that US production must be loving the ‘high price bonus’, might lead to disappointment. With the bulk of the world's fuel consumption growth coming from Asia, the latest poll showing China's economic growth expected to slow to a near 30-year low of 6.2 percent this year can’t have been of much comfort. WTI was last seen right in the middle of today’s $63.66 to $64.65/bbl range, Brent at a premium of $7.35/bbl.
Gold, meantime, was closing the week at the lower end of a $1,293.70 to $1,299.10/oz range, as "Even after the United States' long-drawn-out trade spat with China and threats of a new trade war with the European Union, there is still not much safe-haven buying in gold," said an Indian commodities analyst, explaining that it “has near-term support at $1,285 and huge resistance at $1,350." Earlier in the week it had a little support from Chinese central bank buying and the more dovish views from the larger central banks but dollar-boosting U.S. economic data’ like the weekly jobless claims decline and producer price increases, saw a sell-off that took it back down below the key $1300/oz mark, a break that’s seen as having a negative bias on the metal’s chart. Earlier on Friday a technical analyst thought that bullion “may end its bounce around resistance at $1,297, and then retest support at $1,291.” We’ll it went, more or less, true to chart form as it ran out of bullish fundamentals, an analyst: "Chinese demand, while remaining evident, did little to propel the yellow metal higher, rather providing an underlying level of support to restrict further declines, continuing, "Over the near term, price action will focus on the 10-day moving average at $1,287, while a break below this level would potentially bring the 200-day moving average of $1,250 into play. Resistance levels initially cut in at $1,300." None of that looks particularly encouraging.
On the equity markets, the Nikkei apart, up 0.73 percent, and despite showing 9 winners to four losers, none of the other Asia Pacific exchanges made much of an impact Friday, China’s mainland duo completely ignoring the pleasing and surprising exports posting, no doubt concerned by a wide miss on imports and perhaps cautious of a seasonal aberration that made things look somewhat better than they really are. April’s numbers might be an altogether better pointer. European bourses closed the week 13:2 to the good, slightly higher as a mixture of economic data, the earlier first-quarter results and relief over the latest Brexit situation suggested the economy might be saved. Wall Street embarked on another of its gallops, the Dow up by between 167 and 294 points and tending towards the higher level as its latest corporate earnings season got off to a good start, a couple of major banks better-than-expected and a large (described as “massive”) consolidation deal in the energy sector involving Chevron boosted sentiment. As we sign off for the week, the Dow is 250 points up, Nasdaq a third of a percent, the S&P 500 over a half percent up, having broken above its key 2,900 level and sitting just 1% off a record high. To think where they all were at the end of last year. Resistant if nothing else.
Disclaimer: This report is strictly for information only. INPOL is not liable for any inaccuracies, errors or omission in the report. This report is intended for general circulation and does not constitute an offer or solicitation to buy or sell any investment or commodity product(s). It does not take into account the specific objectives, financial situation or particular needs of any person. Investors should seek advice from a financial or commodity adviser before investing in any investment products or adopting any investment strategies.