Mixed picture for NR markets in June

London – Natural rubber prices continued to be volatile in the month of June with some encouragement for suppliers in the form of a recovery in Chinese contract prices.

According to the latest ERJ snapshot of trading in Far East markets, on the Shanghai Futures Exchange, the closing price for RU1709 – the most heavily traded NR future – strengthened last month, closing at Yuan13,335/tonne in the week ending 2 July.

This reversed the continued falls of the previous two months, which had seen prices declining from Yuan16,450/tonne in early April to Yuan12,310/tonne in early June. 

Japan’s TOCOM exchange saw back-month prices for reference RSS3 materials improve 7% to Yen199.2/kg between 7-28 June, although month-on-month the figure was still down 1% compared to last month’s closing at Yen202.

This, according to market analysts, was mainly due to a stronger Japanese Yen against the dollar and concern over excess supplies. 

In Bangkok, prices for RSS1 grades continued to slide, from $213.05/100kg at the end of May to $176.25/100kg on 30 June - a 17% decline. 

Prices for RSS3 grades also saw a similar trend with a 17% fall from $209.70/100kg on 31 May to $172.85/100kg on 30 June.

In Kuala Lumpur, prices for SMR-20 improved by 3% between 31 May and 30 June to $154/100kg. Latex prices, over the same trading period, dropped 11% to just under $140/100kg.

Overall, according to the Malaysian Rubber Board (MRB), market conditions during the month were very much influenced by instability of the regional rubber futures markets.

Other significant factors, said MRB were currencies movements of the NR exporting countries against the US dollar and fluctuation in crude oil prices. 

Outside China, the market reacted negatively to the news that there were ample supplies of natural rubber in Chinese warehouses. 

According to the June review of the market by the MRB, “NR stocks in the Qingdao bonded warehouse in China increased to 217,000 tonnes as of 9 June from 215,900 tonnes on 26 May.”

Citing a “major tire maker based in China”, the report said “buyers may only start to import NR and SBR from late July when these inventories are depleted.”

Elswhere, the report noted that crude rubber inventories at Japanese ports stood at 4,999 tonnes as of 20 June, up 5.8% from the last inventory date.