Rubber markets remain weak despite signs of recovery

London – Far East natural rubber (NR) markets continued to decline in the two weeks to 24 Sept, despite showing signs of recovery for a short period in mid-September. 

Rubber futures in Osaka, Shanghai and Singapore all reported minor declines compared to the two weeks before, as did the SMR20 on the Kuala Lumpur Stock Exchange.

In India, Kottayam RSS4 posted the biggest decline at 4.5%, as rubber production levels neared a peak. 

During the two-week period, NR prices did see a slight rebound both in the physical and futures markets, due mainly to reports of strong economic recovery globally and a temporary decline in Covid cases. 

The markets, however, started a downtrend by 20 Sept, as supply continued strong with the tapping season in full swing.

Furthermore, the rising number of Covid cases in recent weeks as well as the increasing chip shortage affecting the automotive industry lowered market sentiment.

NR producing countries have been expecting to see a sharp price increase in prices as the market awaits a ‘large-scale’ import from the world’s biggest NR consumer China. 

In its latest market intelligence update 3 Sept, the Association of Natural Rubber Producing Countries (ANRPC) said cited media reports suggesting that the NR inventory is ‘depleting’ in China as manufacturers opted to source their rubber locally to avoid high shipping costs.

“The total inventory has reportedly dropped by190,000 tonnes between the beginning of June and end of August,” said the report. 

As Chinese manufacturers and traders try to replenish the inventory ahead of the offseason, physical markets in Southeast Asia can expect imminent large-scale imports from the country “either in September, or in October,” ANRPC added.

Shanghai SHFE ru2201:               Yuan13,435/tonne (10 Sept) to Yuan 13,365/tonne (24 Sept) – down 0.5%
Osaka RSS3 nearby month:         Yen202.2/kg to Yen201.0/kg –down 0.6%
Singapore SGX TSR20:                 $160.9/100kg to $160.2/kg – down 0.4%
Kottayam RSS4:                             $241.42/100kg to $ 230.60/100kg – down 4.5%
Kuala Lumpur SMR20:                  $161.71/100kg to $ 160.58/100kg – down 0.6% 
Kuala Lumpur Latex:                     $122.00/100kg to $ 119.57/100kg – down 1.9%