Supply Concerns in China Rubber Plantations, Rubber Prices Record Weekly Strengthening

Rubber prices at the Tokyo commodity exchange posted a weekly gain, although it closed slightly lower at the end of trading today, Friday (05/17/2019).

Based on Bloomberg data, rubber prices for the most active contract in October 2019 at the Tokyo Commodity Exchange (Tocom) closed down 0.3 points or 0.16 percent to 192.80 yen per kilogram (kg). Despite weakening, throughout the week the price of rubber has strengthened to 2.94 percent.

Previously, rubber prices opened in the green zone with a gain of 0.41 percent or 0.8 points to as low as 193.90 yen per kg. As for trading on Thursday (16/5), rubber prices closed surging 3.82 percent or 7.1 points to the level of 193.10.

On the other hand, rubber prices at the Shanghai Futures Exchange for the most active contract in September 2019 closed up 1.04 percent or 125 points to 12,195 yuan per ton, after opening up 3.65 percent or 425 points to 12,070 yuan per ton.

Reported by Bloomberg, rubber prices rose soaring this week amid fears of hot weather in some parts of China will suppress production in the world’s largest market for these commodities.

Most rubber-producing regions in China’s Yunnan province have been affected by drought and production in some parts has been cut or stopped, according to Ry Eternity Investment.

Meanwhile, Thailand plans to start export restrictions next week.

China is a large natural rubber producer with an output of around 800,000 tons in 2016, but the amount of imports is far bigger than domestic production. Disruptions in local supply could lead to an increase in China’s natural rubber imports.