RUBBER MARKET TO TURN CAUTIOUSLY BULLISH NEXT WEEK ON SUPPLY CONSTRAINTS - MARGMA

By K. Naveen Prabu

KUALA LUMPUR, Jan 31 (Bernama) -- The rubber market is expected to be cautiously bullish next week, supported by steady upstream price momentum.

Malaysian Rubber Glove Manufacturers Association (MARGMA) said rubber prices are likely to extend their upward trend into next week amid tighter raw material supply and improved sentiment following the US Federal Reserve’s decision to keep rates unchanged.

“Overall, the market is expected to be supported by gradual production reductions in some producing nations and anticipated downstream restocking ahead of the Chinese New Year,” MARGMA told Bernama. 

It added that rubber prices will move in line with regional futures markets, the ringgit and crude oil prices.

Industry expert Denis Low concurred with MARGMA about a bullish rubber market next week, supported by weather-related supply tightness.

Incessant rainfall and the early onset of wintering among rubber trees have disrupted tapping activities, resulting in reduced supply, he said.

“We believe climate change is the main cause, and it is unpredictable,” he told Bernama. 

Supply disruption has already started to push prices and demand higher, with buying interest becoming more active, particularly from China, he said.

“We are seeing more vigorous buying from China ahead of their long Chinese New Year holidays,” he said.

Low added that geopolitical developments in Europe and the Middle East also contributed to market uncertainty and could further influence demand if tensions escalate.

“If war breaks out, rubber demand may increase, prompting stockists and end-users to hold higher inventories and potentially causing severe market volatility in the interim.

On a Friday-to-Friday basis, the Malaysian Rubber Board’s reference price for Standard Malaysian Rubber 20 (SMR 20) rose 6.5 sen to 764.50 sen per kilogramme (kg) while latex in bulk decreased 0.5 sen to 577.50 sen per kg.

-- BERNAMA