The ICEX rubber futures regained strength on Thursday. The contracts were up on fresh buying as the restart of some auto units and tyre companies raised hopes of a revival in demand, analysts said.

This optimism was reflected mainly in its June contract, which swung into contango after trading in backwardation during the past few sessions. “The June rubber is likely to find resistances at ₹12,480 and ₹12,600, while ₹11,000 remain as a strong support for rest of the week,” said Ajay Kedia, Director, Kedia securities.

RSS 4 improved at it May futures to ₹111.34 (110.10) and June to ₹113 (110.60) per kg on the Indian Commodity Exchange (ICEX). The May contracts were up by 1.13 per cent with a volume of 90 lots and total trade value of ₹100.05 lakh.

Loss in production

According to the Association of Natural Rubber Producing Countries (ANRPC), the nation-wide lockdown implemented by the Centre since the last week of March has hindered tapping in the country.In Kerala, the state government gave green signal in mid-April to resume tapping subject to observation of Covid-19 epidemic protocols, except in the regions classified as “red zones”. Although restrictions on harvesting are lifted, tapping has not come back to normal in Kerala due to various reasons which include unattractive prices, lack buying interest from local traders, and dislocation of migrant tappers.

Kerala has also permitted operation of latex processing factories since mid-April to ensure local availability of NR latex to glove manufacturing industry and thereby help them to exploit the surge in the demand for gloves and other rubber-based healthcare products. However, dislocation of workers and supply-chain disruption are expected to hinder the operations of processing factories and trading at least for about two weeks.

The loss in production arising from the lockdown is preliminarily estimated at 50,000 tonnes. Hence the production outlook for 2020 is scaled down to 730,000 tonnes, showing a four per cent increase from the previous year. The production outlook for 2020, as reported a month ago, was 780,000 tonnes.

RSS 3 (spot) firmed up to ₹104.21 (102.24) per kg at Bangkok. Its May futures improved to ₹100.84 (98.49), June to ₹102.90 (99.34) and July to ₹105.10 (101.32) on the Tokyo Commodity Exchange.

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