NATURAL rubber prices, which are already at five-year lows, are expected to weaken further in the near term, dragged down by poor global demand and falling oil prices.
Industry players and analysts said unless something was done by the world’s top producers to prop up prices, some 450,000 smallholders in the country would continue to feel the pinch.
Malaysian Rubber Products Manufacturers Association president Datuk Dr Ong Eng Long said demand from China was slowing as its economy softened.
“The outlook does look bleak due to faltering oil prices and competition from cheap synthetic rubber.
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“The rubber tripartite (International Rubber Tripartite Council consisting of Malaysia, Indonesia and Thailand) must do something to arrest the price decline and not allow it to drop below US$1.50 (RM5.24) a kg,” he told Business Times yesterday.
At the Malaysian Rubber Exchange, SMR20 closed one sen higher to US$1.48 a kg yesterday from US$1.47 on Monday. Prices had fallen from US$2.30 a kg earlier in the year.
Academy of Sciences Malaysia chief executive officer Dr Ahmad Ibrahim said prices were affected by poor China demand as well as intense competition from synthetic rubber.
“The smallholders are having a difficult time. Rubber goods manufacturers are doing fine and they must find a way of sharing their wealth with smallholders during these difficult times.”
Malaysian Rubber Board director-general Datuk Dr Salmiah Ahmad told Business Times last month that natural rubber prices were expected to rise next year as demand was expected to be higher than supply.
“In the next few months, the decrease in the supply of natural rubber, the wet weather and steady global demand are likely to boost rubber prices. This will encourage smallholders to tap again,” she had said.
In October, the government announced a RM100 million rubber productivity incentive for smallholders.
Malaysia churns out some 800,000 tonnes of natural rubber a year for manufacturers of rubber-based products such as gloves, catheters and condoms, which earned the country RM33 billion in export receipts last year.
Thailand is the world’s largest rubber producer, followed by Indonesia (second) and Malaysia (sixth).
The three countries account for 67 per cent of global natural rubber production of more than four million tonnes and 79 per cent of global natural rubber net export.
– malaysiandigest.com
