Sri Lanka rubber prices fall amid collapsing commodity bubble

Oct 13, 2008 (LBO) – A collapsing global commodity bubble, falling demand from industrialised countries and lower oil prices have caused Sri Lankan rubber prices to fall sharply in recent weeks, industry officials said. This has resulted in lower demand for products like solid tyres made by the top rubber buyers in the island, Loadstar and Trelleborg who account for a big chunk of all rubber consumed locally.

"When suddenly the big boys are not taking their usual quota of rubber it has an adverse effect on the local market," Weerasinghe said. "So prices have slumped."

But although prices have slumped, the regional plantations companies are still making good money.

Weerasinghe said that although demand for natural rubber from emerging economies like China and India could sustain the market, it would take time for these countries to pick up the slack.

"True there's demand from China and India. But it would take quite a while for that demand to be felt in the local market. At the moment it all depends on the United States."

Weerasinghe said prices could fall further as more rubber becomes available with traders also holding big stocks.

"The cropping months are ahead of us," he said. "I'd be s