Rubber Rally Seen On Falling Stockpiles
Aya Takada & Supunnabul Suwannakij
Rubber’s 15 percent slump in about a week may be the prelude to rallies to a record high, driving up the cost of everything from tires to surgical gloves.
Harvests in Thailand, Indonesia and Malaysia, the biggest growers, will fail to meet demand in 2011, leaving stockpiles equal to 69 days of demand, the lowest in more than a decade, Goldman Sachs Group estimates. Prices may advance as much as 32 percent to 605 yen per kilogram ($7,407 per ton) by December.
Bridgestone and Michelin, the world’s largest tire makers, are raising prices up to 15 percent.
While that is bad news for consumers, it means “the best price I’ve ever seen,” said Saneh Panpipat, who tends about 320 hectares of rubber trees in southern Thailand. “My staff and many farmers who were unable to afford their own cars now have new Toyota or Isuzu pickup trucks.”
Heavier than usual rain in Southeast Asia, which supplies 70 percent of the world’s rubber, disrupted harvests in recent months. While farmers will increase supply by 9 percent this year, they will not eliminate shortages as demand advances to its highest level since at least 2000, according to Goldman analysts.
Shortages should mean prices as high as 1,200 yen by the end of the year, said Masayo Kondo, president of Commodity Intelligence. The price finished at 457.6 yen in after-hours trading on Friday and settled at 466.4 yen on Monday. Kondo correctly predicted prices would reach a record in September, when futures markets anticipated gains of no more than 6 percent through this month.
Plantations are in their wintering period, when output can drop up to 60 percent. Trees shed their leaves and reduce latex production from February to May.