May 25 (Bloomberg) — Rubber demand from India and China and tight supply after the low-production season will help keep the market strong, the Association of Natural Rubber Producing Countries said.

Demand in China, India and Malaysia, which account for more than 45 percent of global consumption, should stay robust, the association said in its May newsletter.

Natural-rubber imports by China rose 17 percent to 602,000 tons from January to April, and demand, including that of compound rubber, increased 26 percent to 1.05 million tons, according to the association, which represents 94 percent of global output of the commodity. Consumption of natural rubber in India during the first four months jumped 12 percent to 316,000 tons, it said.

Futures in Tokyo plunged 20 percent since reaching a 21- month high of 338.5 yen a kilogram ($3,777 a metric ton) on April 16. The most-active contract gained 1.7 percent last week after dropping to a five-month low of 250.9 yen on May 17. Rubber for October delivery, the most-active contract, fell 2.2 percent to settle at 271 yen on the Tokyo Commodity Exchange.

The International Rubber Consortium Ltd. forecast yesterday that natural rubber prices are likely to stay around current levels, because of increasing demand and a lack of shipments from Thailand.

Tight supplies from the main producing countries after the post-wintering season will support prices, the Association of Natural Rubber Producing Countries said. Trees shed their leaves during the wintering season that runs from February to April, lowering latex output.

The association today maintained the output forecast for its member countries at 9.37 million tons this year, a rise of 6.2 percent from 2009, it said.

The association represents Cambodia, China, India, Malaysia, Indonesia, Papua New Guinea, Philippines, Singapore, Sri Lanka, Thailand and Vietnam.

Source: Bloomberg

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