By Niam Seet Wei
KUALA LUMPUR — The Malaysian rubber market is likely to see an upswing next week, driven by expectations of firmer crude oil prices and a softer ringgit, alongside encouraging economic data from China.
A dealer said concerns over Venezuela’s struggle to meet its crude oil supply obligations and the unlikelihood of the Organisation of the Petroleum Exporting Countries raising production at its meeting this month, might also help buoy rubber prices next week.
“Typically, the natural rubber price will move in line with crude oil prices.Higher crude oil prices make the crude-oil-based synthetic rubber costlier, and hence, encourages a shift in demand to natural rubber,” he told Bernama.
Meanwhile, the dealer said the ringgit, which is expected to trend lower against the US dollar due to the possibility of another interest rate increase by the Federal Reserve next week, would also support the rubber price.
On the impact of firmer Chinese economic data, he said the statistics indicate that demand for rubber might improve, especially from the tyre-manufacturing segment.
China’s official customs data released on Friday showed that its May yuan-denominated exports rose 3.2 per cent from a year earlier, while yuan- denominated imports rose 15.6 per cent year-on-year, resulting in a trade surplus of 156.51 billion yuan (RM97.36 billion).
“It was also reported that the resilience of global demand is expected to continue driving earnings for the rubber glove sector,” said the dealer.
For the week just-ended, the rubber market traded mostly mixed in tracking the mixed signals from regional rubber futures markets and concerns over global trade tensions, especially between the US and China.
Nevertheless, losses were capped by the firmer crude oil prices, along with a softer ringgit versus the greenback.
On a Friday-to-Friday basis, the Malaysian Rubber Board’s noon price for tyre-grade SMR 20 eased 2.5 sen to 556.0 sen per kg from 558.5 sen per kg last week, while latex-in-bulk dropped 31.5 sen to 441.0 sen per kg from 472.5 sen per kg.
The 5 pm unofficial closing price for SMR 20 trimmed half-a-sen to 558.0 sen per kg from 558.5 sen a kg, while latex-in-bulk lost 23.5 sen to 443.0 sen from 466.5 sen a kg.
