Rubber Prices to Stabilize at $3 a Kilo, Group Says

By Supunnabul Suwannakij

June 18 (Bloomberg) -- Rubber prices in the top three producing countries will probably “steady” for the next two months, supported by strong demand and supply “tightness,” according to the International Rubber Consortium Ltd.

“Prices should be steady around $3 a kilogram through the next two months,” Abdul Rasip Latiff, chief executive officer of the consortium, which represents growers and exporters in Thailand, Indonesia and Malaysia, said in an interview today.

“The European crisis may slow the economic recovery, but the demand is still there. Auto sales and tire sales are still up,” he said.

Supply has not improved as much as expected after the annual February-to-April low-production period because dry weather has reduced latex output, he said.

“There is tightness in supply, especially from Thailand and northern Malaysia,” Rasip said.

China’s automobile output this year may grow by as much as 15 percent, expanding from a record to 15 million units, Gu Xianghua, deputy general secretary of the China Association of Automobile Manufacturers said May 29. Vehicle sales surged 46 percent to 13.6 million units last year, overtaking the U.S. as the world’s biggest auto market, fueling demand for the commodity used to make tires.

Key rubber producers in Southeast Asia should establish a regional market to minimize the impacts of “excessive speculation” on prices, Hamzah Zainudin, Malaysia’s deputy minister of Plantation Industries and Commodities, said in a speech in Kuala Lumpur today.

Market ‘Timely’

“With excessive speculation, it’s timely for major producing countries including Thailand, Indonesia and Malaysia to consider setting up an Asean regional rubber market to stabilize rubber prices, guided by supply and demand,” he said.

Rubber futures in Tokyo have slumped about 19 percent since advancing to a 21-month high on April 16 on optimism that economic expansion in Asia and record auto production in China will drive demand.

November-delivery rubber was little changed at 275.2 yen a kilogram ($3,027 a metric ton) at 12:19 p.m. local time on the Tokyo Commodity Exchange today after losing as much as 1.1 percent earlier.

(bloomberg.com)