Rubber

Rubber: Rubber prices slumped to a 16-month low today, likely fuelled by concerns that demand for the commodity from China will slow, after data showed that Chinese manufacturing growth slowed to its lowest in six months. Rubber futures for delivery in Jul ’14 tumbled 1.9% to touch its lowest levels since Sep ’12, after China’s Purchasing Manufacturing Index (PMI) for Jan came in at 50.5, a drop from Dec’s PMI reading of 51. We note that the slump in rubber prices does not bode well for rubber producers, giving limited leeway for any increase in selling prices and margin expansion. Notable rubber-related counters listed on SGX include GMG Global, Sri Trang and Halcyon Agri and Goodpack.