Rubber stockpiles in Thailand, Indonesia and Malaysia are low and may decline further when the low-production season starts, International Rubber Consortium Ltd. said in statement on its website.
Inventories available for sale in the three countries are “low contrary to what is being reported in the media,” the group, which comprises growers and exporters, said after a meeting Feb. 8. The low level “would be further aggravated in the coming months with wintering expected to be severe.”
Rubber in Tokyo plunged into a bear market last month after supply exceeded consumption of the commodity used in car and truck tires. Futures capped an eighth weekly loss on Feb. 7, the longest losing streak since May 2003. Wintering is the period when rubber trees shed their leaves, cutting latex yield.
“The recent sharp fall in natural rubber prices has resulted in natural rubber being traded at a discount to synthetic rubber, which is against the norm for the last few years,” said the group. Thailand, Indonesia and Malaysia represent about 70 percent of global production.
Rubber for July delivery gained 1.4 percent to 225.2 yen a kilogram ($2,198 a metric ton) on the Tokyo Commodity Exchange, extending a 5.8 percent jump on Feb. 7, the most since May.
IRCo views that prices are “unreasonably” low and would advise trade associations to encourage their members not to sell at prevailing rates, the group said. IRCo will also propose to “accelerate and enhance the implementation of the Supply Management Scheme,” it said.
The world market will probably have a surplus of 353,000 tons this year, a third year of glut, while inventories may jump 16 percent to an all-time high of 2.5 million tons, according to RCMA Commodities Asia Pte.
Stockpiles monitored by the Shanghai Futures Exchange total 207,658 tons, the highest level since October 2004, bourse data show. Imports by China, the largest buyer, will probably grow 11 percent this year to 4.26 million tons, compared with a growth of 14 percent a year earlier, data from the Association of Natural Rubber Producing Countries show.
Source: Bloomberg
Published: 09 Feb 2014