RUBBER MARKET TO TRADE RANGE-BOUND WITH UPWARD BIAS NEXT WEEK DUE TO TIGHT SUPPLY

KUALA LUMPUR, Dec 7 (Bernama) -- The local rubber market is expected to be trading range-bound with an uptrend bias mainly due to the tight supply situation following the recent floods in Malaysia and Thailand, said an industry expert Denis Low.

He said that while the two Southeast Asian countries experience annual monsoon rains, scientists say climate change is causing more intense weather patterns that can make destructive floods more likely.

“Hence, there will be a heightened need to stock up and traders may not want to be caught out with a short supply position,” he told Bernama. 

According to the Rubber Authority of Thailand (RAT), the massive floods in South Thailand would have caused damages worth 20 billion baht (RM2.6 billion) as rubber farmers will not be able tap their rubber trees for another month or more.

Meantime, several rubber producing states in Malaysia were also hit by floods resulting from the continuous rains brought on by the Northeast Monsoon.

Meanwhile, he said geopolitical tensions and uncertainty surrounding potential US tariffs on Chinese goods added to market volatility and dampened sentiment.

“Such uncertainty represents volatility and may warrant caution and fear at the same time. The uncertainty and volatility situation are also pushing certain commodity prices beyond expectations while curtailing some as well,” he added. 

On the other hand, the Malaysian Rubber Glove Manufacturers Association said entering the La Nina season, heavy rainfall and flooding in Southeast Asian countries, particularly Malaysia and Thailand, will continue to disrupt natural rubber supply.

“However, the upward trend could be capped by easing activities in the US services sector, as well as US-China trade tensions and the rise in tariffs on Chinese products," it said. 

MARGMA said the delay in the European Union’s Deforestation Regulation (EUDR) may also offer a short-term relief to the market. However, the long-term implications of the EUDR could influence demand for sustainable rubber and, consequently, impact global rubber prices.

Prices could continue to trend upwards in the coming week while continuing to track the performance of regional rubber futures markets, the strength of the ringgit against the US dollar coupled with benchmark crude oil prices. 

On a Friday-to-Friday basis, the Malaysian Rubber Board’s reference price for Standard Malaysian Rubber 20 (SMR 20) increased by 54.5 sen to 933.5 sen per kilogramme (kg), while latex-in-bulk added 15 sen to 688.5 sen per kg.

At 5 pm yesterday, the price of SMR 20 stood at 936.5 sen per kg and latex-in-bulk was at 687.5 sen per kg.

-- BERNAMA