After five months in the blues, the largest record consumption and limitations on rubber exports since 2009 are sending the prices back to a bull market leading to an increase cost for tyre manufacturers.
Three of the world’s major producers of rubber, Thailand, Indonesia and Malaysia, account for 70% of share in the global market, cut its freights by 300,000 metric tons, starting Monday. The cut in the shipment is as much as China, the biggest importer of the commodity used to produce tyres, imports in five weeks and overtakes the forecast of supply for 2013 by the International Rubber Study Group, which is represented by 35 nations.
Tyre manufacturers are cutting their sales to improve the prices that have stumbled to 49 percent since February of last year due to the oversupply of rubber and slower economic growth. When they did the same move in their shipments in 2009, the futures have doubled its number during that year. The current curbs are because of the new policy coming from the Federal Reserve to the European Central Bank to buy more of the debts. It is predicted that the demand will bolster again in 2013, according to a Singapore-based rubber group.
“The bear market is over,” said Makoto Sugitani, the head of commodity derivatives sales at Newedge Japan Inc. in Tokyo who correctly predicted in September 2010 that prices would advance 20 percent within six months. “The easing has spurred fund flows into equities and commodities and export cuts by the three producers will support prices.” (PRA)