Analysis: NR prices do go up as well as down - really

London - September brought across-the-board increases in all markets covered by ERJ's regular snapshot of pricing trends in the main Asian trading centres for natural rubber.

This is the first such upturn for several months and builds on an improvements noted in August, when the overall direction of NR prices switched from negative to 'mixed'.

Buyers in China set the tone: prices for Ru1701 - the most heavily traded future on the Shanghai Futures Exchange - closed the month at Yuan13,255/tonne, 7.0 percent higher than at close of play for the trading week ended 2 Sept.

Similar gains were reported in Tokyo, the TOCOM exchange recording an 8.3-percent rice in back-month prices for reference material RSS3 to Yen164.6/kg between 31 Aug and 28 Sept. Near-month prices rose by 7.6 percent over the same four weeks.

Prices for SMR20 on the Kuala Lumpur exchange increased by 8.2 percent to $137.60/100kg between 2 Sept and 30 Sept, while latex finished the month up 4.5 percent at $114.60/100kg.

The positive trend was followed in Bangkok, but only just. Prices for RSS1 and RSS3 each lifted by just 0.2 percent.

Overall, though, the figures support a recent statement by Association of Natural Rubber Producing Countries (ANRPC) which reported an improvement in pricing linked the gains to “favourable supply-demand fundamentals and a considerable recovery in crude oil price.”

According to the association, total consumption of NR among its members – accounting to 65 percent of global consumption –  increased 3.5 percent, year-on-year, compared to the same period in 2015.

Total NR production by the ANRPC member countries remained stagnant during the first three quarters compared to the same period a year ago.  These 11 countries account for 90 percent of global output.

However, longer term prospects of NR pricing remains mixed, according to a keynote address at the National Rubber Economic Conference 2016 in Kuala Lumpur.

Global NR supply would continue to exceed demand, Ku Kok Peng of the Academy Hevea Malaysia, forecast in a presentation to the conference on 27 Sept

World consumption of NR is expected to increase by CAGR of 3 percent from 2015-2025, while supply will increase by 2.9 percent, Ku’s presentation showed.

But while, he said, the situation would approach parity in 2022 and 2023, the NR market would return to oversupply over the following two years.