Analysts said the product is expected to experience higher levels mainly due to tight supply, driven by demand from industries such as auto and healthcare.
“The increased demand for rubber gloves and packing bands during the pandemic has led to a tight supply of natural rubber … The global rubber supply is already short due to storage in China, while US automakers are rushing to secure shipments before the market is squeezed any further, ”said NS Ramaswamy, head of commodities at Ventura Securities.
India is the world’s second largest consumer of natural rubber, behind China, and the sixth largest producer.
Rubber prices have risen by around 10 percent so far this year and some see the potential for a further 9 percent rise in the future.
Is it time to take a stand?
Ajay Kedia, founder and director of Kedia Advisory, has a positive outlook on natural rubber with a price set to test levels of Rs 17,050 to 17,300 over the next month.
Ramaswamy recommends buying the contract close to the month above Rs 17,350 for a target of Rs 18,500 with a stop loss at Rs 16,500. “Technically, we expect MCX rubber to trade sideways over the course of the month. the next few weeks (Rs 17,350-Rs 15,500) with a possible break on each side, “he said.
The way to go
Natural rubber is expected to trade firmly in the coming week, but disruptions due to issues related to the pandemic will be closely monitored for clues, an analyst said.
“Consecutive vacancies in major international natural rubber markets and major economic data from the United States and China will weigh on prices,” said Anu V Pai, research analyst at
Market players will also closely follow updates on manufacturing activity for clues on rubber prices. Analysts say any negative news from the industry can affect demand for the product.
“A correction in crude oil rates would lower rubber prices,” said Ramaswamy of Ventura.
Meanwhile, Brent futures traded more than 1% stronger at $ 68 a barrel in the last update. The benchmark oil index has appreciated 32% so far this year.