Market and product

June-delivery rubber dropped by as much as 0.5% to 266.60 (110 baht) per kilogramme or US$3,471 a tonne before trading at 268 on the Tokyo Commodity Exchange late yesterday morning.

Natural-rubber inventories monitored by the Shanghai Futures Exchange rose by 900 tonnes to 33,874 tonnes, the highest level since March, the bourse said last Friday.

Rising supply will turn the global market into a 413,000-tonne surplus this year from an 87,000-tonne shortage last year, said the Goldman Sachs Group.

Demand from China is not strong enough to push up rubber prices, said Takaki Shigemoto, an analyst at research company JSC Corporation in Tokyo. There is no tightness in supply as a slowdown in the global recovery curbs consumption.

The market was also capped as oil traded near the lowest price in more than a week in New York, weakening the appeal of natural rubber as an alternative to synthetic products made from petroleum, said Mr Shigemoto.

Oil extended losses for a third day yesterday as signs of weakening growth in Europe indicate fuel demand may falter. The situation regarding Iran is bearish for the price of crude, said Jeffrey Currie, head of commodities research at Goldman Sachs.

May-delivery rubber on the Shanghai Futures Exchange lost 0.6% to 24,455 yuan (123,000 baht) per tonne. The Thai cash price rose to 105.75 baht/kg yesterday from 105.25 baht last Friday, said the Rubber Research Institute of Thailand.

Its statistics show rubber prices were bullish last year except in the fourth quarter due largely to concern over the crisis in Europe and abundant supplies in China.

Export prices of RSS3 products dropped to 119-121 baht/kg in October and November, far lower than the average of 150 baht in the first three quarters.

In the first nine months, strong demand from auto industries in China, the US and Japan pushed up rubber prices and resulted in a historic high of Thailand’s RSS3 products, which sold at an average of 180.53 baht last February, with 155 baht/kg for latex.

But the Thai Rubber Trade Association (TRA) said the situation is quite different this year, as the product depends largely on the economy.

It expects a stagnant rubber trade this year amid the global economic woes.

The TRA reported rubber prices have been continually volatile since last October and are inclined to decrease further due to the crisis that has also made a great impact on stock markets and oil prices and eventually affected rubber prices.

The delay in shipments of big Chinese buyers is one negative factor that had a considerable psychological impact on market price.

But the TRA is positive high rainfall in the South resulting in a lower supply entering the market will push up prices. It also said moves by International Rubber Consortium Ltd, a venture formed by Thailand, Indonesia and Malaysia, aimed at tackling falling rubber prices will be another positive factor.