Rubber market likely to trade range-bound with upside bias
KUALA LUMPUR: The Malaysian rubber market is expected to trade range-bound with an upside bias as trade will be for replenishment purposes, with supply and demand dynamics dictating prices.
Malaysian Rubber Glove Manufacturers Association immediate past president Denis Low said the absence of growth catalysts and the ongoing Ukraine conflict had a dampening effect on economic recovery efforts across the world.
“With the escalation in prices of certain commodities, especially oil and gas, the focus is now on sustainability rather than growth. Without growth and the (full) reopening of economies and borders, it will be a sluggish longer haul before we can see any big recovery in growth.
“As such, there will be buying of rubber for replenishment functions and this means the market will be trading rangebound with a slight tendency to move higher this week,” he told Bernama.
According to Low, the supply and demand situation is hovering on a slight shortage as there are continuous and sporadic rainfalls in the rubber-producing regions that have caused production to be lower.
However, due to the expected limited market demand, prices could remain steady or be slightly higher.
Another dealer said local rubber prices would continue to be influenced by the regional rubber futures markets, movement of ringgit, and benchmark crude oil prices apart from the fundamentals.
“Market operators will continue to monitor developments surrounding the protracted Russia-Ukraine crisis, China’s lockdown and monetary decision from the US Federal Reserve to gauge the prospect of the global economy,” he said.
For the trading week just ended, he said Malaysian rubber performed mixed, influenced by weaker advice from regional rubber futures markets and declining crude oil prices as inflation anxieties, China’s economic slowdown, fierce monetary tightening from the US, and the war in Ukraine weighed on market sentiment.
Nevertheless, prices were supported by declining local rubber production and improved global sentiment due to solid US jobs data for April and China’s pledge of more policy tools for economic support, he added.
On a Friday-to-Friday basis, the Malaysian Rubber Board’s (MRB) reference physical price for Standard Malaysian Rubber (SMR) 20 slipped 2.5 sen to 688 sen a kilogramme (kg), while latex-inbulk rose 21 sen to 670.5 per kg. — Bernama