For the first quarter of 2010, the DCP averaged at 311.95 US cents/kg. and had stayed above the 300.00 US cents/kg. level for most of the days during the period under review. Out of a total of 61 trading days during the period under review, the DCP was above the 300.00 US cents/kg. level for 53 trading days.
It began on the first trading day of the period at 290.47 US cents/kg., which was also the lowest for the period, and breached the 300.00 US cents/kg. level on 8 January and remained above this level, except for 4 days in February, to close the period at a record high of 334.57 US cents/kg.
Thai RSS3 was the leader in setting the record breaking pace in physical natural rubber prices. It had earlier on 25 February breached the pre global economic crisis high when it was recorded 326.78 US cents/kg. It thereafter broke the 330.00 US cents/kg. level on 9 March, the 340.00 US cents/kg. level on 26 March and the 350.00 US cents/kg. level on 30 March. Close on its heels was STR20, when it broke the 2 July 2008 record level on 2 March and thereafter breaching the 300.00 US cents/kg. level and the 340.00 US cents/kg. level on 26 March and 30 March, respectively. Lagging a distance behind these two Thai grades were the Indonesian SIR20 and the Malaysian SMR20, achieving their highest at 333.50 US cents/kg. on 31 March and 324.50 US cents/kg. on 29 March, respectively
Tabulated below comparative highlights of the DCP movements between the 1st quarter 2010 and the 4th quarter 2009:
4th Quarter 09 | 1st Quarter 10 | |||
Date | DCP | Date | DCP | |
Open | 1 Oct | 214.23 | 4 Jan | 290.47 |
Highest | 30 Dec | 287.31 | 31 Mac | 334.57 |
Lowest | 2 Oct | 213.70 | 4 Feb | 290.47 |
Close | 30 Dec | 287.31 | 31 Mac | 334.57 |
Average | 252.47 | 311.95 | ||
% gain/loss | +34.11 | +15.18 | ||
The DCP 14-Day Moving Average opened at 280.57 US cents/kg. and took 11 trading days to track the up trending rubber prices to breach the 300.00 US cents/kg. level on 19 January at 301.94 US cents/kg. It closed as the period’s high of 323.60 US cents/kg.
The nascent recovery in the Western Economies was still uncertain. Despite the huge government stimulus programmes, the real economies still show signs of weakness with unemployment rates still high and business confidence still low. Moreover, the financial crisis was still not over as evidenced by the sovereign debt crisis in the Euro zone and U.K. immediately after the Dubai financial crisis.
For China, the Chinese premier announced at the National People Congress (NPC) opening on 4 March 2010 that China’s GDP will be targeted at 8% growth this year, after achieving a 8.7% growth in 2009, to prevent overheating of its economy.
Nevertheless, the strong fundamental situation in the natural rubber market during the period under review had supported prices at high levels and this is expected to continue into the first half of the following quarter.
Among the notable factors that influenced the physical rubber market and prices during the period under review include:
1. The wintering season that set in mid-February had turned to full swing in March with the end about two months away in April-May. The ongoing abnormally hot weather conditions in Thailand, Malaysia and Northern Sumatra might worsen rubber production in the three countries. Normally, production was expected to fall at least 30%.
2. In China, the severest drought in a century had adversely affected production in its second largest rubber growing area in the South Western Province of Yunan. The area boasted 246,000 hectares of rubber trees with about 30 private rubber manufacturers, most of which has ceased production due to the lack of water. Further, wintering in the largest rubber growing area in the province of Hainan has yet to recover fully.
3. The IRSG has revised upward its forecast for NR production for 2010, increasing to 10.64 million tonnes from 10.56 million tonnes, whilst the ANRPC forecast put it at 10.15 million tonnes, with 94% contributed from its member countries, whose total production was expected to increase by 6.3% from the previous year.
4. The IRSG forecast for the demand of NR, however, was relatively unchanged, revising it marginally downwards to 10.41 million tonnes in 2010, and increasing by 5.1% in 2011.
5. China had been active in the market except for the lull during the Chinese New Year holidays in February, despite some scaling down in imports opting to buy cheaper rubber from domestic warehouses which were sourced earlier at lower prices. The strong auto industry in China with sales of 13.6 million cars in 2009 and projected to increase to 16 million cars in 2010 will ensure increase of NR consumption. Further, China’s domestic production has not fully recovered from its current wintering and its import of natural rubber had surged 63% in the first two months of this year.
6. The major tire makers had been seen in the market for spot purchases at prevailing high prices. For example, Bridgestone was reported to have bought RSS3 at a record high of 348 US cents/kg FOB towards the end of March. They are expected to continue their spot purchases considering that the long term contract quantities had been somewhat reduced by the sellers who prefer to sell in the spot market under prevailing market conditions. Whilst the demand for OEM tires remained uncertain in the Western Economies, the replacement tire markets should be strong from the need to maintain proper inventory levels.
7. The record high prices of latex concentrate had strongly impacted the prices of solid rubber in the international market. Although most of the latex concentrate trades had been confined between Thailand and Malaysia, the competition for the raw materials in Thailand had pushed up the prices of USS and cup lump domestically. With the field latex fetching high prices currently, Thai smallholders preferred to sell field latex for immediate cash rather than processing it to USS which was more time consuming adding to the anxiety of sudden price reversal.
8. Prices of crude oil continued their firm and steady rise reflecting the slow but steady recovery of the global economy with prices on the NYMEX hovering between a low of US $ 71.19 per barrel and a high of US $ 83.76 per barrel, most of the time around the US $80.00 per barrel level.
9. The US dollar continued to weaken against most major and regional currencies, thus boosting physical prices quoted in US dollar terms. For the period under review, the Thai Baht improved from 33.34 to 32.37, the Indonesian Rupiah from 9,340 to 9,115 and the Malaysian Ringgit from 3.42 to 3.27, the yen, however, having strengthened against the greenback for most of the period started to weaken during the last week. It opened at 93.05 yen to the dollar and closed at 93.22.
The following table shows the movement of prices at the various rubber markets during this quarter:
Price Movements at Major Rubber Markets
1st Quarter 2010
4-Jan | High | Low | 31-Mar | +/- | % | |
DCP | 290.47 | 334.57 | 290.47 | 334.57 | 44.10 | 15.18% |
DCP 14-Day | 280.57 | 323.60 | 280.57 | 323.60 | 43.03 | 15.34% |
MRE SMR20 | 283.25 | 324.50 | 283.25 | 323.95 | 40.70 | 14.37% |
SICOM TSR20 | 291.50 | 328.00 | 291.50 | 328.00 | 36.50 | 12.52% |
RRIT RSS3 | 289.79 | 351.25 | 289.79 | 351.25 | 61.46 | 21.21% |
RRIT STR20 | 288.74 | 343.84 | 288.74 | 343.84 | 55.10 | 19.08% |
AFET RSS3 | 301.65 | 333.64 | 232.92 | 333.33 | 31.68 | 10.50% |
TOCOM | 291.99 | 353.84 | 289.74 | 347.03 | 55.04 | 18.85% |
SHANGHAI | 24,585 | 25,890 | 22,175 | 24,740 | 155.00 | 0.63% |
(Denoted in US cents per kg. except for Shanghai which is denoted in yuan per ton) | ||||||
(Irco.biz)
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