Rubber Market Set To Trade With Downside Bias Next Week Amid West Asia Tensions, Weak Demand

By Durratul Ain Ahmad Fuad

KUALA LUMPUR, July 11 (Bernama) -- The Kuala Lumpur rubber market is expected to trade cautiously with a downside bias next week amid escalating geopolitical tensions in West Asia, subdued demand and weather-related supply disruptions.

Industry expert Denis Low said the US-Iran ceasefire has broken down again, pushing crude oil prices higher, with prices touching US$78 per barrel. 

As a result, he expects another round of market uncertainty until a new ceasefire is reached.

“The current geopolitical situation is also pushing certain commodity prices beyond expectations while curtailing some as well. The volatile oil and gas prices are serious issues which can affect businesses.

“At the same time, the runaway strength and weakness of the US dollar can be detrimental to the balance of payment,” he told Bernama.

Low pointed out that sporadic and uncanny weather conditions are expected in certain rubber-producing regions. 

“With such unpredictable weather prevailing, rubber tapping is hampered to a certain extent, causing some farmers to switch to dry rubber instead of bulk rubber production. Despite this, demand remains steady, helping to balance out the shortages caused by the rain,” he said. 

The Thai Meteorological Department has forecast that Typhoon Bavi is not expected to enter Thailand but will indirectly strengthen the monsoonal rains, bringing heavy to very heavy rainfall to the country’s southern, central and eastern regions.

In Malaysia, Low said the Meteorological Department has forecast thunderstorms, heavy rain and strong winds in six states and the Federal Territory of Labuan next week.

Meanwhile, the Malaysian Rubber Glove Manufacturers Association (MARGMA) said the rubber market's performance next week is projected to be supported by stronger producer prices in China and constrained supply in key natural rubber-producing nations, notably Thailand, following forecasts of heavy rainfall.

“However, gains may be capped as both the International Monetary Fund and the Asian Development Bank have downgraded global economic growth forecasts due to persistent West Asia tensions and trade fragmentation.

“Additionally, oil prices will continue to be impacted by fresh US-Iran strikes, which will likely limit any upward price momentum,” said the association. 

-- BERNAMA