It gains on high crude price, supply shortage concern

PETALING JAYA: Natural rubber prices in Kuala Lumpur hit new 15-month highs yesterday, tracking gains in overseas markets amid rising crude oil prices and lingering worries over supply shortage as output from top producing countries declined.

Malaysia’s tyre grade SMR 20 rubber stood at RM9.53 per kg, up 113% since the start of the year. The price of in-bulk latex rose RM6 per kg to add up to its 68% gain year-to-date.

Yesterday, a newspaper report quoted Rural and Regional Development Deputy Minister Datuk Hasan Malek as saying that local rubber production had fallen 23.9% in the first eight months of this year compared with the previous corresponding period.

He also said Thailand’s production dropped 6.1%, Indonesia’s declined 6.3% and India saw a 10.9% fall over the same period.

Production in Thailand, Indonesia and Malaysia made up about 70% of the global rubber output.

A recent report from Thailand, the world’s largest producer and exporter of the commodity, indicated that flood and heavy rain in the main rubber-producing areas in the south had disrupted tapping and distribution activities.

Meanwhile, natural rubber futures on the Tokyo Commodity Exchange were also at their highest since September last year. The benchmark rubber contract closed at 274.9 yen per kg yesterday.

Reports from Tokyo cited rising crude oil price – up 98% so far in 2009 – as a factor that had driven up interest in rubber.

Crude oil in New York rose to a three-week high during Asian trading hours yesterday at US$77.22 per barrel. Crude oil is the raw material for synthetic products that can be used as a substitute for natural rubber.

“Rubber chased a rally in oil,” a Tokyo-based commodity analyst was quoted by Bloomberg yesterday.

Earlier this week, the International Rubber Study Group forecast global rubber consumption, including natural and synthetic, to reach 23.9 million tonnes this year.

Natural rubber production was projected at 10.4 million tonnes.

In the long term, annual global rubber consumption was projected to reach 30.4 million tonnes by 2019, with natural rubber production at 14 million tonnes.

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Syndicated contents from: theStar.com

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