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

1.      China was noticeably underbought in October but increased its purchases in November and December as the switch to buying cheaper NR stocks in domestic warehouses receded as the stocks depleted. Domestic supplies too were tight as wintering set in the rubber producing areas of Hainan and Yunnan beginning November and expected to last until February 2010.

2.      In mid-December China announced that it will reduced its import tariff for natural rubber from 2,600 yuan per ton to 2,000 yuan per ton, in addition to other basic commodities, in a move seen as to spur further the development of its resource-based industries.

3.      The major tire makers have stepped up their spot purchases due to dwindling stocks, concern over tight supply and expectation of improvement in the auto industry and the global economy.

4.      Available statistics showed that global NR imports for the first nine months of 2009 was down by 16% compared to the same period in 2008. However, imports increased in the third quarter compared to the previous quarter, reflecting the signs of recovery in demand.  Chinese imports for this period increased by 5,5% compared to the same period in 2008, however, its imports for the third quarter was down by 37% compared to the second quarter. Imports by the EU, Japan and USA fell by 36%, 31% and 38%, respectively, over the same period, reflecting the continuing slump in these advanced economies.

5.      Whilst available statistics on exports showed that exports from the major producers, except for Vietnam, continued to fall in the first nine months of 2009 compared to the same period in 2008. However, the rate of deceleration was lower in the third quarter compared to the previous quarters, reflecting a stronger demand.

6.      For the Tripartite Countries, for the first nine months  of 2009, production for Thailand declined by 8.86% to 2.149 million tons, for Indonesia by 5.94% to 1.932 million tons and for Malaysia by 29.20% to 0.619 million tons. Gross exports too declined by 8.79% to 1.910 million tons, by 19.65% to 1.488 million tons and by 35.62% to 0.486 million tons for Thailand, Indonesia and Malaysia, respectively.

7.      The IRSG revised its forecast of global NR consumption for 2009, expecting a 5.5% decline to 9.5 million tons versus an earlier forecast of 4.9%. Whilst global NR production is forecast to fall by 5.9% to 9.44 million tons, compared to the previous forecast of 4.8%.

8.      Inclement weather continued to be the major contributor to the tightness in supply. Unexpected wet spells in the main producing areas of Thailand and Malaysia in the third quarter continued with rains and floods in the fourth quarter, receding only in the second half of December, thus depressing further the tight supply situation. In the case of Indonesia, production return to normal in Southern Sumatra and Kalimantan as wintering receded but rains and floods affected production in Northern Sumatra.

9.       Prices of crude oil continued their firm and steady rise reflecting the increased confidence in the recovery of the global economy with prices on the NYMEX hovering between a low of US 69.57 per barrel and a high of US $ 81.37 per barrel, majority of the time above the US 75.00 level, and closing the period at US $ 79.28 per barrel.

10.  The US dollar weakened against most major and regional currencies, thus boosting physical rubber prices quoted in US dollar terms. For the period under review, the Thai Baht improved from 33.52 Baht to 33.35 Baht, the Indonesian Rupiah from 9,650 Rupiah to 9,441 Rupiah and the Malaysian Ringgit from RM 3.47 to RM 3.43. The yen, however, weakened against the greenback from Y 90.14 to Y 92.05.

The following table shows the movement of prices at the various rubber markets during this quarter:

Price Movements at Major Rubber Markets

4^th Quarter 2009

      (Note: Denoted in US currency except for Shanghai)