Rubber Markets in Asia settled higher on Friday comparing with an earlier Friday as many fundamental factors improved significantly, especially the consecutive rises of the Japanese Nikkei index since 22 May 2014 and of crude oil futures on the New York Mercantile Exchange during the week, and tire makers came back to buy natural rubber (NR) on physical markets for prompt shipment. In addition to that, technical charts were improving.
Australia’s weather bureau said recently it expects a return of the El Nino weather system by August 2014, a phenomenon that could damage food crops around the world. The Association of Natural Rubber Producing Countries (ANRPC) reported a prolonged depressed market is crimping NR production as rubber farmers in many ANRPC’s member countries have abandoned their holdings because current NR prices are lower than cost of production.
Chinese authorities are probing an alleged fraud involving metals in Qingdao’s bonded warehouses used as multiple-collateral to obtain bank loans. Market players on rubber futures are now very concerned that some rubber traders and market players might have done the same to obtain multiple-collateral loans, and they now cannot pay back the loans because rubber prices have declined consecutively since the beginning of the year.
At the same time, the People’s Bank of China (PBOC) is tightening its grip for lending by commercial banks in the country. As a result of that, these multiple-collateral loans, if so, could lead to multiple counting of rubber stocks in Qingdao’s bonded warehouses.
It is hoped that precise figures of rubber stocks in Qingdao’s bonded-warehouses will be disclosed by Chinese authorities concerned soon, and NR prices will move towards market fundamentals instead of market sentiment in the coming weeks.
– IRCo
