Rubber Futures to return to high levels : Commerzbank

TOKYO (Commodity Online) : Rubber futures prices are all set to return to highest levels soon and does not herald a correction on high demand by Chinese and Indian car makers, according to Commerzbank analysts.
Commerzbank analysts forecast rubber prices will "likely remain at a high level", noting that 2011 looked set to be the fourth year in the last five in which demand for the tyre ingredient will exceed production.
The fall in rubber futures also appeared to contradict usual market logic in which prices move in line with oil, the raw material for synthetic alternatives.
However, high oil prices, which for Brent crude topped $117 a barrel on Middle East unrest, could also dent the demand for cars which has driven rubber's rally of more than 60% over the last six months.
Indeed, Commerzbank's assessment was based on estimates from the International Rubber Study Group that demand will rise by 4.6% to 11.2m tonnes this year, as demand for vehicles soars among Asia's enriched consumers.
Chinese carmakers expect sales growth of 10-15% in domestic sales this year, with Indian peers forecasting a 23% rise their production.
Rubber consumption in these countries will grow by 9% and 5.2% respectively, the Association of Natural Rubber Producing Countries believes.
Meanwhile, the association believes that output among its members, which account for the great majority of world production, will rise by 4.8% to a little less than 10m tonnes, held back by heavy rains brought by the La Nina weather pattern.
The supply squeeze is being exacerbated at the moment by the entry of Thailand, the top producer, into a seasonal downturn, which last under April, when rubber trees shed their leaves and latex volumes fall to half peak levels.

(Source: http://www.commodityonline.com/news/Rubber-Futures-to-return-to-high-levels--Commerzbank-36772-3-1.html)