Natural rubber latex prices surpassed 700 sen/kg today to close at 703. The rally marked the first time prices closed above the 700 milestone since July 2008, when rising oil prices, new regulatory standards, and factory shutdowns sent disposable glove prices soaring to record highs.
Read more:
Business Standard: NR prices rise on reports of low output
Natural rubber supplies dropped more than 5% in 2009, according to a report published by the Association of Natural Rubber Producing Countries. The four largest rubber producing countries–Thailand, Indonesia, Malaysia, and India–all experienced declines in production. In Malaysia alone, production fell more than 22%.
Experts expect prices to remain high, with demand surging and supplies predicted to remain low as producers fight difficult climate conditions. With producers enjoying the high prices, few believe intervention will come even if prices escalate further.
A key material used to produce latex gloves, natural rubber latex prices directly impact glove prices. Rising natural rubber latex prices can also impact the price of synthetics, such as nitrile gloves, as buyers seek more cost-effective alternatives in lieu of latex.
Driven by rising ethylene costs and weakened supplies, polyethylene prices have climbed nearly 8% this year, according to an article published in Purchasing. Recovering demand has been stymied by factory shutdowns and cold temperatures, which hampered January ethylene production.
Polyethylene producers continue to seek further increases, but with added ethylene capacity expected online in the next several months, it remains unclear whether these increases will materialize.
Malaysian natural rubber latex prices ended the week up about 4.5% from the week before, trading at 696.50 sen/kg Friday. For the year, prices have soared over 13%, according to the Malaysian Rubber Board.
Further reading:
Rubber price at 2-year high on tight supply
Malaysia happy with current rubber prices
Last Friday we reported natural rubber latex was trading at 637 sen/kg. Today, the trading price has jumped to 666.50–a 5% increase from just one week ago, according to the Malaysian Rubber Board. Supplies from the world’s eight largest producers had fallen by 6.4% for the year as of November 2009 (Association of Natural Rubber Producing Countries). In Malaysia and Thailand, the world’s two largest natural rubber producing countries, 2009 production was off by 25% and 10% respectively.
Despite reports that many latex glove manufacturers have already issued price increases, more may be on the way. Natural rubber latex prices are typically a lagging indicator of latex glove prices, since most manufacturers stock at least 30 days of raw materials.
