WASHINGTON (April 4, 2011) — Natural rubber (NR) prices rose strongly in Asian markets as concerns rose over the long-term effects of flooding in prime rubber-growing land in southern Thailand.
Floods and mudslides across the area killed an estimated 45 people and wiped out up to 8,000 hectares (20,000 acres) of rubber plantation land, according to estimates from the Thailand Department of Disaster Prevention and Mitigation. Using rough calculations, up to 120,000 metric tons of NR production could be lost, a Reuters story said.
Meanwhile, NR prices were bullish on the Singapore Commodity Exchange (SICOM). The April 4 SICOM price for Technically Specified Rubber 20 (tire-grade rubber) stood at $5.21 per kilogram for June delivery, while Rubber Smoked Sheets 3 was $5.80 per kilo for June delivery. In the U.S., the price of Standard Indonesian Rubber 20, the grade most often used by U.S. tire manufacturers, was $2.38 per pound F.O.B. (free on board, or at the port of origin).
NR supplies have been short this year, industry experts said, but that has generally been balanced out by reduced demand from Japan in the wake of the March 11 earthquake and tsunami. However, the latter situation probably won't last, according to an industry source who asked to remain anonymous.
“Japan will have to replace all of those cars, and also build earthmoving equipment for the rebuilding,” the source said. “That could result in a huge backlash soon.”