Focus: NR prices surge but market ‘still in oversupply’

London – Building on a rally started two months earlier natural rubber prices shot up during the four trading weeks of November, ERJ’s latest snapshot of NR markets in the Far East shows.

The trend was led by China, where the closing price for Ru1705 – the most heavily traded NR future on the Shanghai Futures Exchange (SHFE) – reached Yuan18,420/tonne on 25 Nov. This was 30.2% above the level recorded at the end of the first trading week last month.

On Japan’s TOCOM exchange, back-month prices for reference RSS3 materials lifted by 28.2% to Yen228.1/kg in the trading weeks between 2 Nov and 30 Nov, while near-month reference price rose 27.0% to Yen221.0/kg.

In Bangkok, prices for RSS1 and RSS3 grades increased by 18.4% and 18.8% – to $207.65/100kg and $204.34/100kg – respectively between 4 Nov and 25 Nov. Kuala Lumpur prices for SMR-20, meanwhile, increased by 17.1% to $1174.05/100kg over the same trading period.

However, Dr Prachaya Jumpasut of The Rubber Economist, believes the recent increases in rubber prices were due mainly to the appreciation in the US dollar, particular against Japanese Yen and Chinese Yuan.

This, he said, was particularly the case during November “when the increase in rubber prices was combined with the speculative activities in the rubber futures market, particularly in Shanghai and TOCOM.”

The rubber market expert also pointed out that with the Chinese Yuan added to the SDR (special drawing rights) basket at the beginning of October by the IMF, “currency movements have become a very important and a more complicated factor influencing rubber prices.”

In conclusion, Jumpasut said: “I do not think these current nominal influences will dominate the fundamental factor, i.e. oversupply of rubber...”