LONDON—Price increases in natural rubber markets made early in the second quarter were more or less wiped out by mid-May.
Since then, though, the market seems to have gained a new lease of life with hikes recorded in some Far East markets, according to a snapshot of trading in China, Japan, Malaysia and Thailand.
On the Shanghai Futures Exchange, prices for the most heavily traded future RU1609 closed the trading week that ended July 1 at $1,724 per ton. That was 8.8 percent higher than the early-month price of $1,584 per ton, recorded the week of June 3.
In Bangkok, meanwhile, market prices for RSS1 and RSS3 rose respectively by 14.9 percent and 15.2 percent to $178.85 per 100 kilogram and $152.45 per 100 kilogram during the same period.
However, a more modest increase was noted in the price of SMR20 in Kuala Lumpur, which was up just 1 percent during June to $129.55 per 100 kilogram.
The picture in Tokyo was mixed between June 8 and June 29. Prices for natural rubber were down 2.1 percent at $1.50 per kilogram, but near month prices were up nearly 10 percent at $1.61 per kilogram.
Overall, markets were still well short of the year-to-date peaks reached in April, suggesting that the producer-country drive to rebalance the market was losing steam.
Recovery was being largely driven by a deal between Thailand, Indonesia and Malaysia to cut rubber exports by 615 kilotons over the six months to August.
The general line from supplier bodies such as the International Rubber Consortium and the Association of Natural Rubber Producer Countries is that prices will start to recover significantly within the next couple of years.
Not everyone shares this view. Rubber prices remain in a period of long-term decline, according to a senior tire industry figure.
“As you all know, raw material prices have gone down, and I think this trend will continue,” Jacob Peled, chairman of Pelmar Engineering, said. “It will go down quite sharply.”
Analyst Prachaya Jumpasut of the Rubber Economist believes the price volatility so far in 2016 was caused by temporary factors against the background of weak fundamentals.
Looking ahead, he said: “The fundamentals still look grim for NR prices to be on a steady increasing trend in the short term.”
Jumpasut noted there had been “some improvement” in the early part of 2016, and he expects consumption to increase by 2.4 percent to reach 27.4 million metric tons by the end of this year. He said this applies to 2017 as well.