Colombo Rubber Auction sees drastic drop in quantities throughout June

The Colombo Rubber Auction saw steady demand for all grades of rubber in June. however, brokers said a drastic drop was evident in rubber quantities throughout the month. 

The drop in quality was attributed to the wet weather conditions and prevailing fuel crisis. The availability of low volumes also led to the postponement of two rubber auctions during the first half of the month. 

During the month of June, the easing of prices was witnessed at the auction. Latex Crepe 1Xs and 1s improved from Rs.1300 to Rs. 1450 whilst No.2s improved by RS. 145, reaching Rs. 1415 by end June. No.3s traded at around Rs. 1150 levels whilst L.CR 4s (off grade) settled at Rs. 740 per kilo.  

The monthly auction report by Forbes and Walker Commodity Brokers stated that the demand for scrap crepes remained steady.

Prices of popular grade 3x brown increased from Rs. 600 to Rs. 623, whilst the rest of the grades had a mixed demand.  Steady demand was evident for RSS as well. During the month, RSS 1s traded at Rs. 800 levels per kilo whilst RSS 3 had an average price of Rs. 743 and RSS 4s Rs. 710. “Prices eased off as the overseas markets came down this week. Main rubber producing countries are in the cropping season whilst declining crude oil prices brought down synthetic rubber prices this week,” said Forbes and Walker Commodity Brokers Director Damith Perera. 

 Meanwhile, in the global context, natural rubber futures settled around Japanese Yen 260 per kilo by end June, moving away from the peak of JPY 270 levels due to continuing concerns of a global recession after the US and several European countries hiked interest rates to rein in sky-high inflation.   Further, recovering rubber supply from major producing countries like Thailand and Vietnam has kept a lid on prices. The Malaysian rubber market ended lower during the latter part of June, tracking weaker regional rubber futures market and a stronger ringgit against the US dollar.   However, natural rubber prices in Kerala stood up firmly due to concerns over supply amid rising demand for the commodity from local manufacturers. Supply concerns persist as rains in Kerala, which accounts for nearly 70 percent of India’s natural rubber output, have hindered due heavy rainfall since mid-May until mid-June.   Further, the less rain in Thailand and in Vietnam, has led to the expectation that raw material supply would improve gradually in coming weeks. According to the Association of Natural Rubber Producing Countries (ANRPC), demand for natural rubber from Chinese manufacturers are still lower while trading activities are running at a slower pace even after China eased some of its COVID-19 curbs.