Past and future of the rubber price

Jana1 wrote:

Backstage wrote:Jana1, do you know the percentages of local consumption vs exports of NR. I read awhile back that with the rise of Loadstar, Dipped and Tyre, the local consumption has gone up considerably. I also think that there are more NR consuming projects in the pipeline.

In 2013, 24 000 M.T raw natural rubber exported and 107,000 MT was local consumed. I don't know about the pipeline, they always talk about it. Even local consumption is gone up considerably, what is the impact in the rubber price? It will adjust with world mkt since our export revenue is almost 50% of local consumption of the finished products.

In 2010, 101bn local consumption versus  63 bn foreign. But in 2013 it was 105 bn local consumption versus 92bn foreign sales. Foreign revenue increases over time.

DIPD is actually doing non-medical gloves which make nearly 13bn rubber related products turnover. Only 0.5% of the 13bn product was sold in Sri Lanka. It has good portion of 92 bn total foreign rubber export.

If we come to tyre 25 % of the 5.8 bn TO is foreign sales. TYRE doesn't have much impact as its TO is just tine portion and it cant influence on local rubber price at all.

In case of REXP, 2.2 bn export versus 0.25 bn local. Most of Sri Lanka rubber related producing companies mainly target foreign mkts. So local rubber price should much with foreign to make sri lanka rubber product so competitive. Sri lankan government aware about the mechanism.

Jana1 wrote:

Backstage wrote:Jana1, do you know the percentages of local consumption vs exports of NR. I read awhile back that with the rise of Loadstar, Dipped and Tyre, the local consumption has gone up considerably. I also think that there are more NR consuming projects in the pipeline.

In 2013, 24 000 M.T raw natural rubber exported and 107,000 MT was local consumed. I don't know about the pipeline, they always talk about it. Even local consumption is gone up considerably, what is the impact in the rubber price? It will adjust with world mkt since our export revenue is almost 50% of local consumption of the finished products.

In 2010, 101bn local consumption versus  63 bn foreign. But in 2013 it was 105 bn local consumption versus 92bn foreign sales. Foreign revenue increases over time.

DIPD is actually doing non-medical gloves which make nearly 13bn rubber related products turnover. Only 0.5% of the 13bn product was sold in Sri Lanka. It has good portion of 92 bn total foreign rubber export.

If we come to tyre 25 % of the 5.8 bn TO is foreign sales. TYRE doesn't have much impact as its TO is just tine portion and it cant influence on local rubber price at all.

In case of REXP, 2.2 bn export versus 0.25 bn local. Most of Sri Lanka rubber related producing companies mainly target foreign mkts. So local rubber price should much with foreign to make sri lanka rubber product so competitive. Sri lankan government aware about the mechanism.

hariesha wrote:

Jana1 wrote:

Backstage wrote:Jana1, do you know the percentages of local consumption vs exports of NR. I read awhile back that with the rise of Loadstar, Dipped and Tyre, the local consumption has gone up considerably. I also think that there are more NR consuming projects in the pipeline.

In 2013, 24 000 M.T raw natural rubber exported and 107,000 MT was local consumed. I don't know about the pipeline, they always talk about it. Even local consumption is gone up considerably, what is the impact in the rubber price? It will adjust with world mkt since our export revenue is almost 50% of local consumption of the finished products.

In 2010, 101bn local consumption versus  63 bn foreign. But in 2013 it was 105 bn local consumption versus 92bn foreign sales. Foreign revenue increases over time.

DIPD is actually doing non-medical gloves which make nearly 13bn rubber related products turnover. Only 0.5% of the 13bn product was sold in Sri Lanka. It has good portion of 92 bn total foreign rubber export.

If we come to tyre 25 % of the 5.8 bn TO is foreign sales. TYRE doesn't have much impact as its TO is just tine portion and it cant influence on local rubber price at all.

In case of REXP, 2.2 bn export versus 0.25 bn local. Most of Sri Lanka rubber related producing companies mainly target foreign mkts. So local rubber price should much with foreign to make sri lanka rubber product so competitive. Sri lankan government aware about the mechanism.

Cannot agree with Jana1. REXP is a very small company and DIPD do have their own plantations. The biggest rubber manufacturing companies in Sri Lanka are not listed. ie: LOARDSTAR.

Rubber manufactures are comfortable with current prices. So the sustainability factor should look at by the authorities. Always local rubber prices were higher than international prices. Due to this reason there were considarable latex imports also in the past.

I think government very correctly understood the situation and increased the CESS on imported rubber. Authorities are of the view that Rs.300/- kg should maintain for rubber in order to sustain the plantations.

hariesha wrote:I will quickly explain why I piked REXP as going to be a success story in 2012, which you might be aware if you have gone through my report.

Logic might be helpful for new investors to pick correct stocks in the future.

1. REXP was at a utter loss and there were lot of internal re-structuring under a solid management with negative NAV
2. The benefit they were going to get from US GSP consession
3. Impending Rupee Depreciation ( New comers might not aware that government did a sudden rupee depreciation in 2011 or 12, the effect took rupee from Rs.110/- to Rs.133/-) This was immensely benefited the exporters as a whole, but mainly to industries that were using 100% local inputs. REXP was in this category.
4. Falling rubber prices. When I was discussing REXP rubber prices have fallen to Rs.400/- per Kg from Rs.600/-+ level. Now it's around Rs.250/- per Kg.


When I discussed REXP for the first time almost all comments were negative and intimidating. But today REXP has gone to a territory even i never expected (Maximum I was expecting was Rs.120/-) and it deserves it. But other than the fundamentals low liquidity was also a factor.

Backstage wrote:

Jana1 wrote:

Backstage wrote:Jana1, do you know the percentages of local consumption vs exports of NR. I read awhile back that with the rise of Loadstar, Dipped and Tyre, the local consumption has gone up considerably. I also think that there are more NR consuming projects in the pipeline.

In 2013, 24 000 M.T raw natural rubber exported and 107,000 MT was local consumed. I don't know about the pipeline, they always talk about it. Even local consumption is gone up considerably, what is the impact in the rubber price? It will adjust with world mkt since our export revenue is almost 50% of local consumption of the finished products.

In 2010, 101bn local consumption versus  63 bn foreign. But in 2013 it was 105 bn local consumption versus 92bn foreign sales. Foreign revenue increases over time.

DIPD is actually doing non-medical gloves which make nearly 13bn rubber related products turnover. Only 0.5% of the 13bn product was sold in Sri Lanka. It has good portion of 92 bn total foreign rubber export.

If we come to tyre 25 % of the 5.8 bn TO is foreign sales. TYRE doesn't have much impact as its TO is just tine portion and it cant influence on local rubber price at all.

In case of REXP, 2.2 bn export versus 0.25 bn local. Most of Sri Lanka rubber related producing companies mainly target foreign mkts. So local rubber price should much with foreign to make sri lanka rubber product so competitive. Sri lankan government aware about the mechanism.

Thanks Jana1 for the informative reply.

I think our Rubber and Polymer scientist deserve kudos for this achievement of high rate of value addition.
I hope that the day we don't export any NR without value addition is near.