By Rajendra Jadhav
KOCHI, India, Feb 21 (Reuters) – Global prices of natural rubber are likely to rebound in the next few months from multi-year lows as political unrest dents output in top producer Thailand and demand from China stays robust, industry and government officials said.
“The stock level in producing countries is very low,” Kamarul Baharain bin Basir, secretary general of the Association of Natural Rubber Producing Countries (ANRPC), told Reuters.
“Now wintering has started. This could lead to higher prices.”
Latex output drops during the dry wintering season, when trees shed leaves. Wintering in Thailand and neighbouring Malaysia runs from February to April. In Indonesia, it runs from February to May before resuming in July through September.
“Thailand is the top producer. Even a 5-percent drop in its production would change the supply situation,” Basir added.
Protesters have been campaigning for months to oust Thai Prime Minister Yingluck Shinawatra and turned their anger on businesses linked to her wealthy family on Thursday.
Thai rice farmers who have waited months for government payments for their produce on Friday called off a protest tractor drive only after winning a government commitment to pay.
China, the world’s biggest consumer of rubber, is set to consume a record a 8.3 million tonnes in 2014, which would lift its natural rubber imports by 11 percent.
“Tyre makers need more rubber. They need to cater to rising demand from the auto industry,” said Sunny Song, director at the China Rubber Industry Association.
The China Association of Automobile Manufacturers expects the auto market to grow 8 to 10 percent this year, echoing the views of industry experts and analysts that 2014 will be another strong year for the world’s top auto market. Vehicle sales rose 13.9 percent last year from a year earlier.
CHINA STOCKS
Prices of tyre grade rubber fell to multi-year lows on persistent worries about a slowing economy in China, its high levels of inventory and weakness in benchmark rubber futures on the Tokyo Commodity Exchange (TOCOM).
But industry officials said the rise in China’s inventories has a limited role in determining prices.
“Everybody is excited about China’s stocks, but that is not an unusual thing, considering its rising consumption. Inventory has to rise in sync with consumption,” said Stephen Evans, secretary-general of the International Rubber Study Group (IRSG).
Warehouse inventories monitored by the Shanghai Futures Exchange have risen to their highest since 2004, while closely-watched stocks in bonded warehouses in the port of Qingdao have jumped more than 11 percent in the past month to around 340,000 tonnes.
Sunny Verghese, chief executive of commodity trader Olam International, said stocks in China are likely to come down in the next 6 to 12 months, allowing room for prices to harden.
The IRSG expects global rubber consumption to rise 4.4 percent in 2014 after posting a 2.5 percent increase last year, driven by demand from Asia.
“Since prices were falling, everybody was liquidating stocks. Inventory level is low in Thailand. Even a moderate rise in demand can push prices higher,” said Pongsak Kerdvongbundit, honorary president of Thai Rubber Association. (Editing by Clarence Fernandez)
Source: Reuters
