Yunnan drought may push up rubber price

Months-long drought in Yunnan Province has caused investors’ worries, including natural rubber traders.

Yunnan is one of China’s major manufacturers of rubber. The province turned out 302,000 tons of raw rubber in 2009, contributing nearly 39% of the nation’s annual yield. However, three-year drought is curtailing volume, which is projected to decrease at least 10 to 20% percent every year.

Li Jianan, chemical industry analyst, said Yunnan-drought situation is hard to change, which will affect natural rubber’s supply in China. In that case, price is definitely soraing this year.

At the same time, some analysts opposed that China already imports much of its rubber from Indonesia, Malaysia, Thailand and Vietnam. Yunnan’s reduction won’t affted natural rubber’s supply in China.

Statistics from Shanghai Futures Exchange showed that China’s natural rubber price has fallen down from the high level, due to Thailand delays its purchasing and storage plan and China’s demand hasn’t come into peak. But rubber price still remains high.