Rubber prices seen increasing in 2016

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“Rubber is expected to be priced between RM5 and RM5.50 per kg in the first half of 2016 for the SMR 20,” Malaysian Rubber Board director-general Datuk Dr Mohd Akbar Md Said told reporters after a signing ceremony between the board and Nadicorp Holdings Sdn Bhd for the trial application of environmentally-friendly tyres made from natural rubber – Ekoprena and Pureprena.

Mohd Akhbar said rubber prices were likely to fall after the first half of 2017 before stabilising in the subsequent two years.

“This is because the supply situation is likely to remain the same,” he added. Rubber prices of SMR 20 free-on-board is currently trading at RM4.81 per kg.

Mohd Akhbar said the governments of Thailand, Malaysia and Indonesia had agreed to increase the domestic consumption of rubber.

“Countries that are producers of rubber such as Thailand, Indonesia and Vietnam are faced with the same challenge in that we are at the mercy of global prices for the material.

“For now, we want to diversify the usage of rubber so that we do not just depend on our export market.

“From manufacturing rubber products such as gloves, we are now producing Ekoprena and Pureprena,” he said.

“We are targeting to produce 300,000 tonnes of Ekoprena and Pureprena by 2020, and 400,00 tonnes of existing rubber products like gloves.”

According to a Bloomberg report, rubber traded in Tokyo, a global benchmark, has tumbled 70% from a record in 2011, touching a six-year low of 153 yen (US$1.26) a kg on Nov 6.

Futures in Shanghai have slumped 22% in 2015. The export price from Thailand, the top producer, has fallen 23%.

Under the project, the board and Nadicorp would use 500 tyres with the new technology to the latter’s express bus fleet under Konsortium Transnasional Bhd starting from 2016 to 2018.

“We have dispatched samples of the Ekoprena and Pureprena tyres to companies such as Hankook Korea, Continental Tyres Germany as well as Michelin,” he said.

“So far, a Japanese company has expressed interest in our trial product.”

The collaborative project between the Malaysian Rubber Board and Nadicorp came under the National Key Economic Area and was meant to contribute towards the doubling of the nation’s gross income per capita from US$7,000 to US$15,000 by 2020.