MRB forecasts flat rubber prices in near term

Kuala Lumpur – Malaysian natural rubber (NR) prices are expected to fluctuate within a narrow range in the near term as worries over the resurgence Covid-19 cases globally will likely limit a recovery in demand. 

Despite an uptick in the prices over the month of July, the Kuala Lumpur NR market is likely to remain uncertain “due to a general lack of firm direction from supply-demand fundamentals,” said the Malaysian Rubber Board in its review of the month.

Prices are expected to take cues from the performance of ringgit, crude oil prices and regional rubber futures markets, MRB said, noting a decline in Singapore Exchange (SGX) SICOM rubber futures.

Also impacting the market, will be the economic impact from a possible second wave of Covid-19 as well as growing tensions in the US-China diplomatic relations, MRB said.

Over the month of July, Kuala Lumpur rubber futures registered growth following promising signs of recovery in China’s economy, and reports of declining local NR stocks. 

The department of statistics Malaysia (DOSM) announced in on 15 July that the country’s NR output fell 39.2% in May to 21,044 tonnes compared to 34,616 tonnes in April.

On a year-on-year basis, production was more than halved, DOSM said, adding that NR stocks declined 8.2% in May to 295,146 tonnes compared to 321,413 tonnes in April 2020. 

China’s economy grew by 3.2% in the second quarter after it shrank by 6.8% in the first quarter of the year due to the Covid-19 pandemic. 

The uptrend throughout the month was supported by positive news about the development of a potential Covid-19 vaccine.