Natural Rubber Price Up +25%

The price of RSS3 grade natural rubber has shot up 25 per cent to US$2.0/kg in the last month (and US$ 1.8/kg for TSR 20 grade). True, according to Deutsche Bank analysts the latest prices surge is expected to impact tyre manufacturers’ profit and loss accounts in the first quarter of 2010. But this is still significantly below what tyre companies paid in 2008 (approximately $2.8/kg; 2007:$2.3/kg). Furthermore, according to the bankers, this is “not necessarily bad news for the industry” because higher input prices reduces the risks of “negative pricing” in the short term. In other words, with the impending recovery in sell-in markets expected any time now, in the coming months the industry will face no difficulties in increasing selling prices.

Global production of natural rubber (NR) is estimated to have fallen by 4.6 per cent, according to Association of Natural Rubber Producing Countries (ANRPC) data for July. The figures show that Thai production fell by 12.4 per cent on an annualized basis. Production during the 12 months to June 2009 was 2906 thousand tons, down 6.0 per cent from 2008 (January to December). Indonesia’s NR output contracted 6.0 per cent in first half 2009 compared with the same period in 2008. Production is estimated to have fallen by 3.1 per cent to 2665 thousand tons in the 12 months ended June 2009, compared to 2008 full year. Production in Malaysia dropped by 32.6 per cent in first half 2009.