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Most rubber futures and physical rubber markets in Asia continued improving from Monday to Wednesday as investor confidence returned after IRCo had reiterated that the current natural rubber (NR) prices were unreasonably low while NR supplies available for sales in the ITRC countries were at low levels as the dry wintering had disrupted rubber tapping in these countries. Therefore, IRCo advised respective rubber Trade Associations in these countries to jointly encourage their members not to offer NR at the prevailing low prices.
Unexpectedly, market players panicked and liquidated their long positions on rubber futures in the region on Thursday and Friday to cut losses after the HSBC’s preliminary reading for its purchasing managers’ index (PMI) on Thursday, which tracks manufacturing activity inChina’s factories and workshops, fell in February to its lowest level in seven months of 48.3. That resulted in the continued falls on both rubber futures and physical rubber markets in the region on Friday.
Nonetheless, NR supply in the ITRC countries, which are the major NR suppliers in the world, has declined significantly. And the decline in NR supply from these countries will be more severe in the coming months. In addition, most rubber plantations in the three countries are now facing severe drought.
Source: IRCo
