WASHINGTON—Natural rubber prices are hitting levels unseen since the HIV/AIDS scare of the late 1980s, according to various sources, and are likely to stay high or go even higher at least through year-end.
Standard Indonesian Rubber 20—the NR grade used most often by U.S. tire manufacturers—stood at 81 cents per pound at the port of delivery Oct. 7, up 26.5 percent from 64 cents on June 10.
Reports from Asia stated that NR prices are at their highest levels since 1988, when the panic over the international AIDS epidemic was at its height. Sources mentioned several factors as influencing prices, including:
* continued high oil prices, which mean high prices for synthetic rubber that will put pressure on NR prices;
* the monsoon season in Thailand and other major NR-growing areas, which will limit rubber tapping at least until December;
* a typhoon hitting the key NR-growing region in China, as well as Hurricane Stan temporarily cutting off transportation routes in the increasingly important NR-growing center of Guatemala; and
* continued strong worldwide demand, particularly from the burgeoning economies of China and India.
"I just don´t know where prices will go," said an NR industry source who asked to remain anonymous. "These days you can build a pretty good case for their going either up or down. But my gut feeling is that for the near term, we´re looking at the continuation of current prices, or even higher ones.
"It´s been a solid, steady rise in prices," the source said. "They might fall back a couple of cents, but then they went up again. And we can´t ignore oil prices, because they do affect synthetic rubber prices."
Nevertheless, looking at the Consumer Price Index over the last 20 years, one can reasonably infer that NR prices should have doubled over that period, according to the source. This is the first year in more than a decade that prices actually have doubled over 1985 levels. "Maybe prices aren´t too expensive now, but have been too cheap over the last 10 years," the source said.