01/12/2011

www.gupta-verlag.de/rubber

FAR EAST/MALAYSIA: 2011 may be buoyant year for natural rubber

Rubber prices, which hit many new historic highs over the past two months, are set to extend their rally into the first quarter of 2011 on a prolonged tight supply situation, says industry experts.Currently, Malaysian rubber grades SMR 20 and latex-in-bulk are trading at record levels of RM15 and RM9.93 per kg respectively.Malaysian Rubber Board director-general Ms Datuk Dr Salmiah Ahmad saidthat the bullishness in rubber prices was principally fuelled by a tight supply situation, speculation in rubber futures, Thailand's imposition of a new cess effective Oct 1 2010 and dwindling stocks in major producing and consuming countries.She said traders in the producing and consuming regions had reported strong market fundamentals following the lack of physical supplies and record low levels of stocks at private warehouses in consuming nations.In recent months, output has also been affected by abnormal rainfall.Meanwhile, Malaysian rubber prices were also boosted by the strengthening of the ringgit.In fact, the natural rubber (NR) price trend since 2006 had seen many new highs, supported by concerns over supply tightness, firm crude oil prices and speculation over a shortfall in production and strong demand.On the near-term outlook, Salmiah said: "The seemingly unstoppable growth in China, coupled with anticipated higher average oil prices in 2010, point towards a buoyant year ahead for NR."She added that higher rubber prices were expected in 2011. The current heavy rain falls and floods in producing countries, coupled with tsunami wrecking parts of Indonesia, had affected production in the final quarter of 2010.."This will be followed by the seasonal lull of leaf shedding or wintering from January to March, reducing total output by some 30% to 40%."In this scenario, major consumers will be making plans to replenish their much-depleted inventories in the months ahead," added Salmiah.The low stock levels worldwide will be also another plus point for NR price..Salmiah pointed out that rubber stock levels were at an all time low at least in a decade. The current stock level is equivalent to about five to six weeks of world demand compared with two to three months previously.(Syed Rashid Ali, Karachi, Pakistan)

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