Natural rubber price rally goes into reverse

London – Those insisting that the surge in natural rubber (NR) prices over recent months would run out of steam seem to have been proved correct – sooner and more emphatically than most would have expected.

Having continued to ramp up prices into early February, with gains averaging around 20%, ERJ’s latest snapshot of Far East market shows that NR buyers had well and truly hit the brakes going into the third month of the year.

On the Shanghai Futures Exchange, the closing price for RU1709 – the most heavily traded NR future – fell 13.6% during March to close the month at Yuan16,300/tonne. This was 24% below the level of Yuan21,475/tonne for the most heavily traded future on 2 Feb.

Japan’s TOCOM exchange saw back-month prices for reference RSS3 materials fall by 10.2% to Yen244.0/kg between 1-29 March. Near-month values fell 11.9% to Yen268.4/kg over the same period. Again these values were over 20% lower than those recorded in early February.

In Bangkok, prices for RSS1 and RSS3 grades each dropped by just over 7% – to $254.75/100kg and $233.40/100kg respectively – between 3 March and 31 March.

Kuala Lumpur prices for SMR-20 fell by 13.0% to $183.45/100kg over the same trading period. Latex prices, meanwhile, were down 24.0% to $154.25 as of 31 March.

Overall, the downward trends support views reported in ERJ that the recent, apparent recovery in NR prices was due mainly to short-term factors, such as flooding in southern Thailand and a spike in Chinese demand as well as currency and oil-price movements.

The factors seem to have worked through the system, with the supply/demand balance now more in favour of buyers.