Natural rubber production in Malaysia and Thailand have recovered, but the increase is not large enough to cause a serious surplus, a senior International Natural Rubber Organization official said.
"I don't think there's serious tightness, or surplus," said Yap Chiat Bine, senior buffer stock officer. He added that consumer demand has changed little.Mr. Yap said the price of natural rubber probably will trade in a tight range for the next one or two months. "The market is going to be dull, unexciting," he said Tuesday.
Ng Choong Sooi, principal economist at the Malaysian Rubber Research Development Board, said prices are stable and supply and demand seemed to be in sync.
Mr. Ng agreed that prices probably will move little in the near term. Price movements will depend on the performances of the developed economies, and there are predictions a recovery in the U.S. economy will be weak, he said.
U.S. auto sales remain low at 6.5 million units annually while fewer sales are being made for replacement tires. Historically, the automotive industry is the single largest end-user of rubber in the United States.
Demand for latex gloves is growing sharply in the medical services professions as preventive measure against AIDS.
Traders here said the summer holidays in Europe are unlikely to pressure prices significantly. "If (buyers in Europe) are quiet, we are quiet," an exporter said.
"If prices come down too low, I don't think the producers will be able to sell. I think it's going to be below their cost," he added.
Traders added that prices on some grades of rubber will depend on purchases by South Korea, while sales to the United States are slack.
Traders said short-covering by those who have received payments from the U.S.S.R. has generated support for latex concentrate. At low prices, harvesters likely will sell their field latex to processors to turn into latex concentrate instead of using the latex for SMR10 and SMR20 grades, the traders said.