Asian rubber futures settled lower Wednesday in the low-production season, as a lackluster demand outlook weighed.
Benchmark August natural rubber on the Tokyo Commodity Exchange settled 1.4% lower at Y213.8 a kilogram.
The International Rubber Study Group’s Secretary General Stephan Evans said a natural rubber supply overhang of 1 million metric tons from 2011-2013 was weighing on the market, despite a fall in output due to low prices.
Speaking at an industry event in Singapore, Evans said the overhang was taking the wind out of the market, which needed “some evidence that this is being consumed.” He added there was “no problem” with rubber demand, but the industry was building capacity to meet demand “too early” as new plantations come online. The IRSG expects global rubber demand to rise to 29.1 million tons in 2015 and 30.3 million tons in 2016.
With market sentiment weak, it was “about time” for rubber producing countries to work together more closely, said International Rubber Consortium Chief Executive Yium Tavarolit in a note this week. He added that the council was working with the emerging rubber producing countries of Cambodia, Laos, Myanmar and Vietnam to establish an Asean Rubber Council to better manage production and marketing.
August Tocom rubber closed Y0.5 lower at Y213.3/kg in the night session, which is considered part of the next trading day.
– 25 March 2015, 09:39 AM, Dow Jones , Bangkok
