The weak global economy has driven down prices
for everything and one of the hardest hit commodities – natural rubber, is trying
to fighting back. The prices of natural rubber hit a record high of ¥528 a kg
in February 2011 and later fell to nearly three year low and August series currently
trading at ¥214 a kg. The drop in price was mainly contributed by negative
market sentiment caused by various factors including uncertainties in global
economic growth. Weaker oil prices make synthetic rubber, an alternative
petrochemical rubber grade, cheaper and normally encourage investors to
liquidate natural rubber contracts on TOCOM to avoid risk.
The top three rubber producers, under the
International Tripartite Rubber Council, had agreed to reduce exports by
300,000 tonnes and to accelerate the replanting programme of 100,000 hectares,
which will result in further reduction of export by 150,000 tonnes. With these
two measures, a total of 450,000 tonnes of natural rubber will be withdrawn
from the market, hoping to boost prices.
According to some dealers, fears of defaults
gripped the rubber market and whenever prices drop, defaults happen, with the
price of some tyre grades already falling nearly 30% since January because of
weaker Tokyo futures and ample supply in Southeast Asia. Late last year, the
ASEAN Rubber Business Council blacklisted buyers who defaulted on shipments and
urged members to ignore requests from Chinese buyers for discounts following a
plunge in prices.
In the 1st August 2012 issue of Rubber4U, we had
forecasted that domestic RSS4 grade rubber price to touch `.168
per kg, which happened on 14th August. Hence, we request our readers
to be in touch with our website. Don’t expect the rubber price to show
immediate rise. Still lot more down side has to be seen, as the economic outlook
is still weak.
Read
lot more in Rubber4U – 1st September 2012 issue
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