WASHINGTON (Jan. 9, 2014) — Natural rubber (NR) prices have reached their lowest levels on Asian markets since late 2009, prompting concerns that China, the world's largest NR consumer, faces a slowing economy.
However, sources in the rubber trade said they believed other factors were at work regarding NR prices, and suggested that the current dip may not be of long duration.
Data from the Tokyo Commodity Exchange Jan. 8 showed rubber futures at 256.1 yen ($2.46) per kilogram, up 2.1 yen from the two-month low posted the day before.
On the Singapore Commodity Exchange, meanwhile, futures for Rubber Smoked Sheets 3 stood at 236.5 cents per kilo Jan. 8, up a fraction from the previous day but down from the 253 posted on Dec. 27. The Jan. 8 price for Technically Specified Rubber 20—the grade of rubber used for tire manufacturing — was priced at 218.7 cents per kilo, compared with 218.5 Jan. 7 and 229.5 Dec. 27.
News reports Jan. 6 placed Chinese NR stockpiles at a nine-year high, which contributed to fears that the Chinese economy is weakening.
"The Chinese economy has been off, and current (NR) prices are a little bit of a red flag for me," said an industry source who asked to remain anonymous. "We'll see an economic slowdown in China. But I also think the U.S. economy is back, and we are a horrendous consumer of things. Furthermore, a lot of the things the U.S. consumes come from China.
"I always feel that China gets the best of us," the source said. "Things will be quiet for a while, then they start buying up everything."
Greg Jagt, vice president of trading at Astlett Rubber Inc. in Oakville, Ontario, noted that the Shanghai futures market seemed to be falling faster than most other markets. He also said, however, that Vietnam — one of China's largest NR suppliers — had increased NR production 14 percent in 2013 and seemed poised to raise production still further.
In any case, Mr. Jagt did not think China was the sole factor in the current NR pricing situation. "It seems to be a global issue to me," he said.
What is the most pressing issue facing your dealership in 2017?
|Finding skilled, qualified workers||
71% (103 votes)
|Competition from online tire sales||
16% (23 votes)
|Managing marketing and social media efforts||
7% (10 votes)
|Upgrading our shop’s technology and equipment||
5% (7 votes)
2% (3 votes)
|Total votes: 146|