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British Rubber & Polyurethane Products Association

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Palm oil, rubber ‘prices to prove rangebound’

Posted on 21 August 2014

Sipef added its voice to commentators calling time on the rout in palm oil futures, but remained sceptical over the prospect for a recovery, foreseeing something of a rangebound future for rubber prices too.

For rubber too, which remains near its own five-year low on Tokyo’s futures exchange, it looks like prices “the time being the market will remain in a narrow trading range”.

While rubber inventories in China, the top importer of the tyre ingredient, have fallen by 20%, “this is not yet sufficient” to spark a rally, Sipef said.

And even if Thailand, the top exporter, succeeds in a drive to reduce supplies through measures such as adding rubber to asphalt and by encouraging replanting, so taking some production capacity temporarily offstream, “these factors will only impact the market on medium term”.

The International Rubber Study Group this week forecast a world rubber production surplus of 202,000 tonnes next year, following on from surpluses last year of 650,000 tonnes and 371,000 tonnes expected for 2014.