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Natural Rubber prices within sight of RM8 a kg

MALAYSIA'S natural rubber (NR) price is within striking distance to hit RM8 a kg in the medium term, which would be its highest level in 20 years.

On the Malaysian Rubber Exchange last Friday, SMR20 tyre rubber grade (Standard Malaysian Rubber) settled at buyers/sellers prices of RM7.84/ RM7.86 a kg respectively, more than tripled the levels four years ago.

National Association of Smallholders (Nash) vice-president Aliasak Ambia said the spike is due to several factors such as strong global demand as well as rising tensions over Iran's uranium enrichment programme.

"As it is, there are already concerns on a shortage of synthetic rubber supply and if war breaks out in Iran, NR prices will go up for sure," Aliasak told Business Times in a phone interview.

Synthetic rubber is NR's rival and is derived from crude oil.

He said at RM8 a kg, the country's more than 200,000 rubber smallholders will be the main beneficiaries.

According to a study by the London-based International Rubber Study Group, NR prices could more than double to US$5 (US$1 = RM3.61) a kg (from US$2.16 currently) by 2010 in line with rising crude oil prices of US$100 a barrel from US$75-US$80 currently.

NR prices have been bullish due to a host of reasons, including robust demand from China's hungry motor vehicle sector and supply that could not keep up with strong global demand.

The volatile security situation in southern Thailand and a producer's pact have also been succesful in supporting NR prices.

Thailand, Indonesia and Malaysia, which are the world's top three rubber producers respectively, account for about 80 per cent of the world's NR output.


Source: The New Straits Times Press (M) Berhad