In this article, we draw attention of tire recyclers to rapidly increasing natural rubber (NR) prices. Applications of crumb rubber largely overlap with those of NR, therefore crumb rubber gains commercial advantages.

Considering a snapshot of Asian Markets, European Rubber Journal reports that natural rubber prices keep ramping up: there has been a 20% increase since the beginning of the year.

One of the most heavily traded kinds of NR futures – Ru1705 – was priced on the Shanghai Futures Exchange at CNY 21,475 per ton on the 2nd of February. This was 17.8% higher than the price in the end of the last year.

TOCOM exchange in Japan observed an increase in reference materials RSS3 which appreciated by 15.4% (JPY 315.5 per kg) between the 4th of January and the 1st of February.

Reference grades RSS1 and RSS3 traded in Bangkok increased by some 27% each – up to USD 287.85 per 100kg and USD 284 per 100kg respectively. The increase was observed between the 30th of December and the 2nd of February.

In Kuala-Lumpur, prices for SMR-20 gained 20.5% and reached USD 237.35 per 100kg during the same period. Prices of latex reached 186,95% on the 2nd of February (an increase by 28.1%).

Dr. Prachaya Jumpasut from the Rubber Economist attributes the recent stunning increases to short-term factors added effects of oil prices and currency fluctuations. The factors included unexpected heavy rains in the southern part of Thailand and speculations in Japan and China.

Dr. Jumpasut says that Thailand is the biggest natural rubber producing country and any new with regards to interruptions in rubber supply would for sure incur a surge in futures prices at TOCOM and Shanghai stock exchanges. He emphasizes that even insufficient labor supply in Malaysia – the fifth largest rubber-producing country in the world – caused anxiety among speculators.

The Rubber Economist decided to moderate the forecast of Thai NR output in 2017 largely because of problems with weather. However, even before the floods in Thailand, the forecast predicted negative values for the world’s NR balance.

This is supposed to bring global consumption, as well as stocks, down, but the long-term trend of steady increase in NR prices will remain intact.

Article source: European Rubber Journal