Sept 18, 2008 (LBO) – Sri Lankan natural rubber prices have come off their highs after oil prices plunged but are likely to remain strong with demand from emerging economies like India and China, an equities research report said.
Prices of plantations stocks rose in recent months on the back of a global commodities boom with their earnings boosted by strong tea, rubber and palm oil prices.
However, the boom now is over and commodities prices have begun to fall.
The SC Securities equities research report said strong prices of low grown teas should also help plantations firms.
Prices of low grown teas have stayed strong owing to demand from oil exporting countries of the Middle East and Russia.
Lower oil prices would make petroleum-based synthetic rubber, the alternative for natural rubber, cheaper.
SC Securities said listed regional plantations companies with a mix of tea and rubber would benefit from continued strong demand for rubber.
“Rubber prices are seen at a somewhat moderated level with the decline of oil prices where the competition coming from synthetic rubber is soften