IRCo's Daily Composite Price (DCP) averaged at 161.12 US cents/kg. and stayed above the 160.00 US cents/kg. level for the majority of the period under review. Out of a total of 63 trading days during the period under review, the DCP was below the 160.00 US cents/kg. level for only 22 trading days.

It began on the first trading day of the period at a low of 145.01 US cents/kg. and breached the 150.00 US cents/kg. level within a couple of days at 151.80 US cents/kg. on 3^rd April . It only managed to be above the 160.00 US cents/kg. level for four days in April but stayed above it for the whole of May and only dipped below it for 5 days in June. The highest was recorded on 13^th May at 168.40 US cents/kg. and it closed on 30^th June at 160.87 US cents/kg.

There were still some uncertainties in the recovery of the global economic recession. Whilst there had been sighting of the "green shoots" of economic recovery, most agreed that the bottom has yet to be reached but the downturn has gradually slowed down. China was still a major factor that’s playing a big role, together with other emerging economies like India, to help slow down the decline by recording positive growth rates.

The stable recovery of physical natural rubber prices were supported mainly by the steady purchases by Chinese buyers  and the lingering tightness in supplies due to inclement weather and the continuation of the export curbs program by the three major producing countries.

Among the notable factors that influenced the physical rubber market and prices during the period under review include:

1. Steady purchases by Chinese buyers. It seemed the economic stimulus has positive effect on the rubber demand as China is poised to be the biggest car market in the world surpassing the US. It is anticipated that 2009 car sales in China would reach 11 million units compared less than 10 million units in the US.

2. China has also decided to build strategic stockpiles of commodities like crude oil, steel, copper, soy bean, etc. and increased the stockpile target for rubber from 80,000 tons to 150,000 tons, with purchases from local producers in an effort to also support the domestic market.

3. Imports of natural rubber by India in April-June 2009 increased by 107% to 44,093 tons from 21,259 tons for the same period in 2008 and it is expected to reach 150,000 tons for the year 2009-10 compared to 99,927 tons for 2008-09.

4. Imports by China, Japan, the EU and the US continued their declining trend dropping by 25%, 22% 37% and 12% for the first quarter of 2009 as compared to first quarter 2008.

5. On the supply side, production in both Indonesia and Malaysia slipped by 6.0% and 25.4% for the first half 2009 compared to the same period in 2008. Whilst in Thailand production slipped by 18.0% in the first five months 2009 compared to the same period in 2008. Exports from Thailand, Indonesia and Malaysia dropped by 13.4%, 24.8% and 32.0% for the periods January-May, January-April and January-June 2009, respectively, compared to the same periods in 2008.

6. The inclement weather contributed to the tightness in supply. Wintering in Thailand and Malaysia which was supposed to end in early April, lingered on followed by unseasonal rains in Thailand and excessive hot weather and haze in Malaysia. Whilst wintering has set in North Sumatra in June, production in other parts of Indonesia was normal.

7. The continuation of the AETS by the 3 ITRC countries into the second quarter by another 144,000 tons brought the total export curbs for the first half of the year to 414,000 tons from a total of 700,000 tons for the year.

8. Prices of crude oil increased amidst expectation of a slowing recession. From an average of US $50 per barrel from the last quarter into April, it climbed to an average of US $60 per barrel in May and hovered just below US$70 per barrel for most part of June.

9. Global auto sales was expected to decline further in the second quarter albeit at a lower rate than in the first quarter despite uptakes in sales in April in China, India and Brazil. Whilst many do not expect tyre demand to go back to 2008 levels any time soon, tyre makers have started to reduce their capacities.

The following table shows the price movements in the major rubber markets during the period under review:-

Price Movements at Major Rubber Markets

2^nd Quarter 2009