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Wednesday May 14, 2008

Market trends

By IZWAN IDRIS


PETALING JAYA: The local natural rubber benchmark rose above RM9 per kg for the first time yesterday, boosted by surging prices overseas.

The tyre grade Standard Malaysian Rubber 20 (SMR 20) on the Malaysian Rubber Exchange jumped to an all-time high of 902.5 sen per kg yesterday, up 8.5 sen from its previous close. It is up 8% over the past one month.

The commodity's price has risen sharply in main markets like Japan and China in recent weeks amid growing concerns over tight physical supply in the global market and record high crude oil prices.

Natural rubber prices on the Tokyo Commodity Exchange, the global benchmark for the commodity, jumped as much as 2% to 315 yen per kg yesterday. The most active futures contract settled at 313.9 yen, its highest since Feb 27.

A Bloomberg report quoted a Japan-based trader as saying that China may step up its rubber purchases after its raw material stockpile fell to a 19-month low.

On May 9, the Shanghai Futures Exchange said rubber inventories at the country's major warehouses had fallen to 39,025 tonnes from the January peak of 96,760 tonnes.

China's customs office data showed that the country imported 140,000 tonnes of natural rubber in April.

Meanwhile, crude oil price in New York was almost flat US$124.30 per barrel as of 8pm local time yesterday. It hit a record high of US$125.96 per barrel last Friday.

Higher crude oil price makes petroleum-based synthetic rubber more expensive and encourages industries to switch to natural rubber.

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