IRCo’s Daily Composite Price (DCP) continued its rally into the second quarter of 2010 and recorded an all time high of 350.67 US cents/kg. on 15 April 2010. It had earlier, on 26 March at 327.25 US cents/kg., breached the pre global economic crisis high of 325.74 US cents/kg. recorded on 2 July 2008.
For the second quarter of 2010, the DCP averaged at 317.45 US cents/kg. and stayed above the 300.00 US cents/kg. level for the majority of the period under review. Out of a total of 63 trading days during the period under review, the DCP was above the 300.00 US cents/kg. level for 47 trading days.
It began on the first trading day of the period at 335.37 US cents/kg. and continued its rally to reach an all time peak of 350.67 US cents/kg. on 15 April, managing to stay above the 350.00 US cents/kg. level for a couple of trading days before easing by 17.69 US cents/kg. to 332.98 US cents/kg. on 30 April. It then plunged by 41.17 US cents/kg. within 11 trading days to reach the lowest for the period at 291.81 US cents/kg. on 17 May. It recovered to over the 300.00 US cents/kg. level on 24 May, except for 5 days in the second week of June, and closed on 30 June at 303.27 US cents/kg.
Thai RSS3 again was the leader in setting the record breaking pace in physical natural rubber prices into the first month of the second quarter, recording an all time high of 405.83 US cents/kg. on 26 April. TSR 20 grades too set new all time records, led by STR 20 at 358.34 US cents/kg. on 21 April, SIR 20 at 353.00 US cents/kg. on 6 April and SMR 20 at 336.05 US cents/kg. on 15 April.
Tabulated below comparative highlights of the DCP movements between the 2nd and 1st quarters of 2010:
1st Quarter 10 | 2nd Quarter 10 | |||
Date | DCP | Date | DCP | |
Open | 4 Jan | 290.47 | 1 Apr | 335.37 |
Highest | 31 Mac | 334.57 | 15 Apr | 350.67 |
Lowest | 4 Feb | 290.47 | 17 May | 291.81 |
Close | 31 Mac | 334.57 | 30 Jun | 303.27 |
Average | 311.95 | 317.45 | ||
% gain/loss | +15.18 | -9.57 | ||
The DCP 14-Day Moving Average opened at 324.62 US cents/kg. and took 16 trading days to overtake the DCP on 23 April before breaching it again on 24 May and thereafter moving conversely against the peaks and lows of the DCP to close the period at 305.42 US cents/kg. The highest DCP 14-Day Moving Average recorded for the period was at 346.78 US cents/kg. on 26 April whilst the lowest was at 298.20 US cents/kg. on 25 May.
The strong upsurge in physical natural rubber prices up to the middle of April was mainly due to the shortage of RSS 3 and excessive speculation in the TOCOM and SICOM compounded by the purchase of the same material, namely field latex, by latex concentrate processors.
Whilst the reverse, with a sharp decline in prices from mid April to mid May, was due to the absence of major buyers, especially China, where releases from government stockpile and drawdown on stocks bought earlier at much lower prices were undertaken to ease the pressure of high prices in the international market.
Nevertheless, steady demand. as evident in spot and nearby month purchases, with uncertainty over supply coming back to normal with the end of the wintering season had underpinned the decline in prices and maintained them above the 300.00 US cents/kg. level during the majority of the period.
Among the notable factors that influenced the physical rubber market and prices during the period under review include:
1. The wintering season in the northern hemisphere was at its peak in the first half of April and eased off thereafter but its lingering effect transcended into May. Production did not revert back to normal as expected and the problem was compounded by unexpected downpours in June which disrupted tapping activities.
2. The lingering tightness in supply in Thailand continued to force latex concentrate producers to compete for the same material creating further pressure on RSS 3 prices
3. China released 60,000 tonnes of natural rubber from the government stockpile estimated at 180,000 tonnes and drawdown on stocks by 120,000 tonnes out of 160,000 tonnes in Qingdao’s warehouses, bought earlier at much lower prices, in efforts to mitigate the high prices and pressure from tight supplies.
4. Consumption remained robust despite major consumers had slowed down their purchases in anticipation of further price decline or sidelined by drawing down their inventories.
5. Concerns were still lingering over the contagion effects from the Greek financial crisis which may impact other Euro zone countries which might slow down the global economic recovery.
6. The euphoria over China’s announcement on 19 June that it will allow more flexibility with its yuan exchange rate diffused after a couple of days after the fact sink in that any effect would seep in over a period of time. It augurs well for natural rubber in the long term because it will make imports cheaper.
7. Prices of crude oil declined during the period under review reflecting the concerns and low confidence in the contribution of the western economies towards the total global economic recovery. Prices on the NYMEX opened on 1 April at US $84.84 per barrel and closed on 30 June at US $ 75.63 per barrel. The highest recorded was US $ 86.84 per barrel on 6 April with the lowest at US $ 68.01 per barrel on 20 May.
8. Regional currencies held steady against the US dollar. The Thai Baht moved from 32.36 to 32.46, the Indonesian Rupiah from 9,064 to 9,068 and the Malaysian Ringgit from 3.26 to 3.25. The yen, however, strengthened against the greenback moving from 93.71 to 88.65.
The following table shows the movement of prices at the various rubber markets during this quarter:
Price Movements at Major Rubber Markets 2nd Quarter 2010
1-Apr | High | Low | 30-Jun | +/- | % | |
DCP | 335.37 | 350.67 | 291.81 | 303.27 | -32.10 | -9.57% |
DCP 14-Day | 324.62 | 346.78 | 298.20 | 305.42 | -19.20 | -5.91% |
MRE SMR20 | 325.20 | 336.05 | 272.10 | 286.00 | -39.20 | -12.05% |
SICOM TSR20 | 327.50 | 339.00 | 275.00 | 293.00 | -34.50 | -10.53% |
RRIT RSS3 | 351.67 | 405.83 | 339.82 | 356.90 | 5.23 | 1.49% |
RRIT STR20 | 344.25 | 358.34 | 297.35 | 302.22 | -42.03 | -12.21% |
AFET RSS3 | 336.53 | 352.80 | 269.84 | 289.59 | -46.94 | -13.95% |
TOCOM | 349.27 | 433.67 | 300.23 | 356.12 | 6.85 | 1.96% |
SHANGHAI | 24,665 | 25,750 | 20,625 | 21,395 | -3,270.00 | -13.26% |
(Denoted in US cents per kg. except for Shanghai which is denoted in yuan per ton)
(Irco.biz)
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