Rubber Prices Reach Six-Decade High

Some Tyres & Accessories readers have accumulated sufficient birthdays to remember the year 1952, but the rest of you can well imagine the world of 58 years ago: Elizabeth becomes Queen, a ‘killer fog’ descends upon London, television continues to grow in popularity, the Korean War enters its third year – and the price of natural rubber hits US$3.50 a kilogram. Panic buying stemming from fear the aforementioned conflict would spread to neighbouring countries pushed prices to heights that would never again be reached. Until March 31, 2010, that is.

Yesterday the price of natural rubber broke through the all-time high of $3.50 a kilogram established in 1952, a severe drought and a subsequent reduction in rubber supplies in Thailand the stated cause of this upward price movement. According to the Rubber Research Institute of Thailand, prices for RSS3 rubber reached $3.52 per kilogram in the physical market on March 31. This represents an increase of around 75 per cent during the past year.

“The present market is tough for raw material purchasing managers,” the Financial Times reported Association of Natural Rubber Producing Countries senior economist Jom Jacob as saying. “We could imagine what would be the response of the rubber market if tyre companies frantically enter the market. Perhaps, they do not want to fuel the prices further.”

The drought in northern Thailand is said to be the worst in a decade, and meteorologists have pointed the finger at El Niño. Drought has also affected India, the world’s fourth-largest producer of natural rubber.