Rubber has the distinction of being a material that occurs naturally in the fluid of the plant Hevea Brasiliensis, while also being able to be produced synthetically. It is a polymer of hydrogen and carbon, and has elastic tendencies, meaning that it will revert to its original shape if stretched or otherwise twisted, but will remain misshapen if heat is applied to it. The production of rubber synthetically involves the polymerisation of a number of different monomers such as isoprene and chloroprene. Rubber producers can add other properties to this synthetic rubber by the addition of deliberate impurities. Natural rubber, conversely, is produced by collecting the sap of the Hevea Brasiliensis and refining it.
Rubber is an appealing item of trade for those involved in commodity trading as the material has a wide range of practical applications and around 90% of natural rubber produced is used for export purposes. This therefore indicates a large market and a high demand for the product, which are attractive qualities to any trader than has the ability to accurately predict future fluctuations in the rubber commodity price.
Since rubber is one of the world’s primary industrial commodities, rubber trading is widespread, with the rubber commodity being traded on a number of commodity exchanges. These include the Tokyo Commodity Exchange (TOCOM) (where the ticker symbols are TCE/JRU on Reuters and JNA on Bloomberg), the Osaka Mercantile Exchange (OME) (where the ticker symbols are JRI, JKR and JOS), the Singapore Commodity Exchange (contract codes RSS3 and TSR20) and two Indian exchanges: the National Commodity and Derivatives Exchange (NCDEX) (ticker symbol: RBRRS4KOC) and the Multi Commodity Exchange (ticker symbol: RUBBER).
The rubber trade is centred around the automotive industry, as tyres, auto tubes and other automobile parts are all constructed out of rubber. Rubber is also used in cabling, in the manufacture of footwear and in the manufacture of various latex items. Thailand is the largest producer of rubber in the world, manufacturing an estimated 2357000 tons a year, with Indonesia producing 1543000 tons a year. In terms of market consumption, rubber is consumed the most in the USA, with China, Japan and India following behind. Thailand, as well as being the largest rubber producer, is also the leader in the field in terms of research and development of synthetic rubber production methods. India is expected to becoming a leader in terms of production in the next decade due to several factors that work to its advantage. It has an extensive plantation sector and has the indigenous availability of most of the basic raw materials such as natural rubber and rayon. The domestic market is substantial and when this is coupled with the fact that labour is available at relatively low costs, it is easy to see why India can in a very short period of time become a major player in the rubber market. The emergence of India as a serious player in the rubber market will have a marked effect on the rubber market price.
Rubber commodity prices are affected by a number of factors. The current demand for automobile tyres will cause the spot price of rubber to fluctuate dramatically over the course of a year, whereas rubber futures are affected by various government policies concerning subsidies and trade restrictions. The rubber market can also be affected by the weather, as rubber production tends to decrease dramatically during periods of heavy rain.