Rubber prices likely to struggle, no rebound in sight: Industry body
Wednesday, 21 May 2014 00:20
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REUTERS: Rubber prices are likely to struggle near multi-year lows in the short-term, hurt by worries over China’s economy and Thailand’s plan to make huge sales from its state stockpiles, an industry body said on Tuesday.
Rubber on the Tokyo Commodity Exchange, the global benchmark, has plunged about 25% this year on fears of slower economic growth in top consumer China.
Despite a slight recovery, the TSR20 contract on Singapore’s SICOM exchange, which covers Thai, Indonesian and Malaysian grades, is still not far from its weakest in nearly five years.
“The story for rubber is not going to be very positive,” said the Secretary General of the International Rubber Study Group, which forecasts supply and demand.
“You’ve got fundamental oversupply ... (Even without) the Thailand situation, everybody is nervous because of China,” Stephen Evans told reporters on the sidelines of a conference hosted by Singapore-based IRSG.
Thailand, the world’s largest producer, has said it would push on with plans to sell 200,000 tons of rubber from state stockpiles, shrugging off strong opposition from farmers.
World natural rubber supply is forecast to outstrip demand by 241,000 tons in 2014, according to the IRSG, down from a surplus of 384,000 tons last year. The surplus could narrow to 183,000 tons in 2015, the group says.
