The director of Sri Trang group and chairman of International Rubber Association (IRA) Mr. Paul Sumade Lee attended Shanghai Derivatives Market Forum (SDMF) on May 28th, and addressed on Natural Rubber Sub-Forum with the topic “global natural rubber demand and supply”.

Mr. Lee said, after long time continuous drop in rubber prices, the imbalance of natural rubber value chain was getting worse. Upstream farmers suffer a lot, RM and rubber dealers get huge loss, only downstream make big profit. This situation should not last long time. We expect consolidation and reshuffle in rubber industry soon.

Mr. Lee also emphasized the underlying deficit in supply and historic low level will limit the further drop of rubber prices to below $1,500/ton.

Supply of natural rubber faces some challenge. Low prices have cut rubber supply. Abnormal weather (El Nino) might impact supply further. Now processors all faced difficulties in buying RM. Meantime, demand is on steadily growth on back of development of auto and tire industry in mid-and-long run. Global major economies all show good performance. US recovered gradually with improved economic data; EU sped up QE stimulus; Japan witnessed a bottom-up in economy; China grows step by step in light of policies to stabilize growth and the implement of Belt and Road Initiative. In line with low level of rubber prices compared to other assets and commodities, more funds and traders will buy technically, which will support rubber prices to above $1500/ton.

Shanghai Derivatives Market Forum, jointly held by domestic four exchanges, is the largest and mostly influential forum in area of commodities and financial derivatives.