(From the Oct. 31, 2011, issue of Rubber & Plastics News)
WASHINGTON (Nov. 1, 2011)—Widespread flooding has closed auto factories in Thailand, but the country's natural rubber production has been relatively unaffected, according to sources close to the rubber trade.
Most of the flooding in October has taken place in the northern part of Thailand, whereas 85 percent of NR-growing regions are in the south, they said.
“It's a bit of a curious thing,” said one source who asked to remain anonymous. “Last year at this time, there also were massive floods in Thailand, and rubber prices rose accordingly. But last year the flooding was in the south.”
Flooding in Thailand has forced prolonged production stoppages at Toyota, Honda and Nissan operations in the major manufacturing hub.
Rain and other production problems haven't exactly helped NR supply, the NR industry source said. But the continuing saga of financial problems in the Euro zone, as well as a generally soft global economic picture, has acted to counterbalance any shortfalls in supply.
In fact, the International Rubber Consortium has asked Thailand, Indonesia and Malaysia to slow natural rubber exports until prices rise.
“IRCO will recommend members tell farmers that they should reduce raw rubber sales until prices are at a level reasonable to both sellers and buyers,” IRCO Chief Secretary Yium Tavarolit said Oct. 24, blaming a sluggish global economy for the lower prices.
The NR industry source agreed with that view.
“There is some evidence of a slowdown in Europe and the U.S., and even in China to a certain degree,” he said. “Rubber buying is slow in most countries, and the warehouses in China are full of rubber.”
The price of Standard Thailand Rubber 20, or Thai tire-grade rubber, has stayed in the $4.10-per-kilogram range in October, a substantially lower figure than just a month or two ago, the source said.
On the Singapore Commodity Exchange, the price of Rubber Smoked Sheets 3 stood at $1.8325 per pound, or $4.04 per kilo, on Oct. 20. In April 2011, RSS 3 was $2.65 per pound.