Oil Rally Effect on Price of Rubber Continue Stronger

The strengthening of rubber prices continued in trading this morning, Wednesday (27/12/2017), supported by the effects of crude oil rally and the steps of some countries to hoist prices.

The price of rubber for delivery in June 2018, the most-active contract on the Tokyo Commodity Exchange (Tocom), rose 0.19% or 0.40 points to 212.50 yen per kilogram (kg) at 10:20 pm.

Earlier, the May rubber futures contract stagnated at 212.10, after trading on Tuesday (26/12) ended up with a gain of 1.78% or 3.70 points.

According to Kazuhiko Saito, an analyst at Fujitomi brokerage firm in Tokyo, the continued strengthening of rubber prices is supported by the surge in crude oil prices on Tuesday.

On Tuesday, West Texas Intermediate oil futures for February delivery closed up 1.50 points at US $ 59.97 per barrel, the highest level since June 2015.

Brent oil for February delivery ended up 2.71% or 1.77 points at $ 67.02 a barrel on the London-based ICE Futures Europe exchange, its highest level since May 2015.

"Rubber prices are also getting support from the steps of a number of producing countries to cut supply," added Saito, as quoted by Bloomberg.

Three rubber-producing countries agreed to cut rubber exports by 350,000 tons by March 2018.

Indonesia, Malaysia and Thailand joined the International Tripartite Rubber Council (ITRC), agreed to re-implement the Agreed Export Tonnage Scheme or rubber export restrictions in December to March 2018 to raise the price of the commodity.

Director of the APEC and International Trade Organization Deny Wachyudi Kurnia explained that in the export restriction, Indonesia received 95,190 tons. Meanwhile, Thailand 234,810 tons and Malaysia 20,000 tons.

He revealed the agreement was generated in an ITRC meeting held in Bangkok, Thailand, Friday (22/12). It said it would ask Vietnam's support as another big rubber producer who just joined the ITRC some time ago.

Meanwhile, Vietnam's Ministry of Agriculture and Rural Development today reported that export of Vietnam rubber in 2017 is estimated at 1.39 million tons, up 11% y-o-y, while rubber exports in November reached 145,000 tons from an earlier estimate of 143,000 tons.

Supporting the rubber, the yen appreciated a thin 0.03% or 0.03 point drop to 113.26 per US dollar at 10:26 am on Tuesday (26/12) ending up just 0.01% at 113 , 23.