Rubber Market Surges Further

Bangkok, 2 April 2010 – Both Asian physical and futures rubber market surged to a further high on Friday as the demand outlook improved along with the global economic recovery and the tight supply situation continued on seasonal reasons.

Thai RSS 3 was reported to have been offered at US $ 3.60 per kg. up from US $ 3.52 per kg. offered earlier in the week. Dealers said this level was likely to rise further as supply was falling with the wintering seasons expected to reach its peak in mid-April when most farmers would stop tapping. Buyers, however, were reluctant to meet the offer with most bidding about 5 US cents lower.

Malaysian SMR 20 could rise to US $ 3.40 per kg. from US $ 3.30 per kg. while Indonesian SIR 20 could rise to US $ 3.30 per kg. from US $ 3.20 per kg.

Physical rubber prices had surpassed the pre 2008 global economic crisis high of US $ 3.25 per kg. achieved in July 2008,  since early March and making new records, surpassing the all time high levels, around US $ 3.30 per kg.,  achieved during the Korean War 58 years ago.

The benchmark Tokyo rubber futures contract for September delivery rose to a high of 318.5 yen per kg. on Friday, the highest for any benchmark since early September 2008.

A Reuters poll showed on Thursday that strong demand as the global economy recovers and tight supply for seasonal reasons are expected to push Tokyo rubber futures up in April.

The key factors that would push rubber futures on TOCOM to as high as 320 yen was tight supply during the current dry wintering season in Thailand and Malaysia when tapping normally come to a standstill in April.

The recent sharp fall in production were forcing some rubber users and dealers to take physical deliveries from TOCOM, the reason for the backwardation on the TOCOM prices for the nearby months.

However, TOCOM’s benchmark contract was forecast to slip to 317.5 yen per kg. by end May as production would start to recover by then, the Reuters poll said.

(Irco.biz)