TOKYO/SHANGHAI Oct 30 (Reuters) - Rubber prices have
rocketed to their highest in over three years as protective
glove demand surges due to the COVID-19 crisis and industrial
use rebounds in China, while supplies remain tight with
producers struggling to replenish stocks.
Output across Southeast Asia - which accounts for more than
two-thirds of natural rubber supplies - has been hit by
coronavirus-related labour shortages as well as floods and
unfavourable weather in Thailand and Vietnam.
Recent data has underscored the depth of the supply-demand
gap that traders now worry could be exacerbated by unrest in key
"Speculation that escalating confrontation between the
authorities and anti-government protesters in Thailand may cause
supply disruptions have also fuelled concerns over tighter
supply," said Shinichi Kato, president of rubber material dealer
Shinichi Kato Office.
Rubber futures on Japan's Osaka Exchange hit their
highest levels since February 2017 on Thursday, having jumped
more than 40% since late September.
The most-active rubber contract on the Shanghai futures
exchange is also at three-year highs and up 26% for the
year to date. Markets in Singapore and Thailand have also seen
Global rubber glove demand has climbed more than 20% this
year to 360 billion pieces due to the coronavirus pandemic - by
far the largest annual jump on record, according to Malaysia's
rubber glove manufacturers association (MARGMA) and the
Bangkok-based Economic Intelligence Centre.
"We think demand for rubber gloves will keep rising as long
as there is no vaccine for COVID-19. For the remaining two
months of the year, demand is still soaring," said Kanyarat
Kanjanavisut, senior analyst at Economic Intelligence Center.
Malaysia, a rubber glove manufacturing hub that is home to
world leader Top Glove, saw its glove exports soar 48%
in the first half, MARGMA said, adding that it expects the
global glove shortage to stretch into the first quarter of 2022.
"The demand for latex for gloves is so strong that it is
depriving rubber users of supplies for other products such as
tyres," said a trader at Singapore-based rubber trading company.
Production woes have meant output across Thailand, Indonesia
and Malaysia is set to shrink 9.8% this year, according to the
International Tripartite Rubber Council.
Thailand's benchmark physical RSS3 rubber sheet prices
<RUB-RSS3C-BKK> are up 76% this year and 36% in October alone.
"It's worrying that rubber output this month will not be
enough to match the growing demand of foreign markets," Rubber
Authority of Thailand Governor Nakorn Tangavirapat said.
A recovery in China, which has largely contained the
coronavirus, is also tightening supplies with the world's No.2
economy expanding 4.9% on the year in the third quarter.
"Strong orders from Chinese tyre makers ... have squeezed
physical supplies, boosting prices especially in near-term
contracts," said Kato.
China auto sales marked a sixth straight month of gain,
rebounding a solid 12.8% in September.
"We keep an optimistic view about China's tyre demand for
the next three months as local heavy truck sales have maintained
a year-on-year growth of 50-60% while sales of passenger cars
showed annual growth of 5-10%," an analyst at CITIC Futures
($1 = 31.2700 baht)
(Reporting by Yuka Obayashi in Tokyo, Emily Chow in Shanghai,
Liz Lee and Mei Mei Chu in Kuala Lumpur, Patpicha Tanakasempipat
in Bangkok and Naveen Thukral in Singapore: Additional reporting
by Aaron Sheldrick; Edited by Gavin Maguire and Edwina Gibbs)