LONDON—Nature rubber is well on its way on the road to recovery.
Key physical and future natural rubber markets continued to improve over the two weeks to Oct. 22 due to continuous robust demand in Southeast Asia and China.
In Shanghai, the most active rubber contract for January delivery closed 2.4 percent up compared to Oct. 8, while Japanese rubber futures rose 4.4 percent following a positive assessment of the economy by the U.S. Federal Reserve.
Physical markets for latex and SMR20 on the Kuala Lumpur Stock Exchange also saw healthy growth, while Kottayam RSS4 posted a positive development over the two-week period.
In its latest rubber market analysis on Oct. 17, the Association of Natural Rubber Producing Countries (ANRPC) linked the higher prices to the easing of COVID-19-related restrictions and restored economic activities, which have uplifted the demand prospects for NR.
In addition, the surge in crude oil prices has given a strong support to NR markets due to the speculation on possible substitution from synthetic rubber to NR, according to the ANRPC.
The rally in crude oil has also boosted commodity exchange traded funds.
Over the short term, the association said physical markets in Southeast Asia expect a robust demand from China for delivery ahead of the long holiday in China for the Lunar New Year.
China is scheduled to remain closed for two weeks from the end of January through mid-February in conjunction with the Lunar New Year on Feb. 1, 2022.
Constraints for the global production of NR, including COVID-19 movement restrictions, leaf spot disease and extreme weather conditions are also likely to push prices up.
The ANRPC, however, warned that the pace of global recovery has slowed down due to several factors such as energy supply crunch, semiconductor chip shortages and recurrent floods.
Shanghai SHFE ru2201: $2,250 (Yuan 14,395)/metric ton (Oct. 8) to $2,305 (Yuan 14,750)/ton (Oct. 22)—up 2.4 percent
Osaka RSS3 nearby month: $1.94 (Yen 221)/kg to $2.02 (Yen 230.9)/kg—up 4.4 percent
Singapore SGX TSR20: $171.0/100kg to $175.7/100kg—up 2.7 percent
Kottayam RSS4: $227.33/100kg to $228.36/100kg—up 0.4 percent
Kuala Lumpur SMR20: $169.56/100kg to $178.85/100kg—up 5.4 percent
Kuala Lumpur Latex: $122.69/100kg to $128.70/100kg—up 4.8 percent