KUALA LUMPUR—Malaysian natural rubber prices are expected to fluctuate within a narrow range in the near term as worries over the resurgence in COVID-19 cases globally will likely limit a recovery in demand.
Despite an uptick in the prices over the month of July, the Kuala Lumpur NR market likely is to remain uncertain "due to a general lack of firm direction from supply-demand fundamentals," the Malaysian Rubber Board said in its review of the month.
Prices are expected to take cues from the performance of ringgit, crude oil prices and regional rubber futures markets, MRB said, noting a decline in Singapore Exchange SICOM rubber futures.
Also impacting the market will be the economic impact from a possible second wave of COVID-19 as well as growing tensions in U.S.-China diplomatic relations.
In July, Kuala Lumpur rubber futures registered growth following promising signs of recovery in China's economy, and reports of declining local NR stocks.
The Department of Statistics Malaysia said on July 15 that the country's NR output fell 39.2 percent in May to 21,044 metric tons compared to 34,616 tons in April.
On a year-on-year basis, production was more than halved, DOSM said, adding that NR stocks declined 8.2 percent in May to 295,146 tons compared to 321,413 tons in April 2020.
China's economy grew by 3.2 percent in the second quarter after it shrank by 6.8 percent in the first quarter of the year due to the COVID-19 pandemic.
The uptrend throughout the month was supported by positive news about the development of a potential COVID-19 vaccine.