Digital platform for natural rubber trade will appear in 2019
The company Halcyon Agri (Sighnapur), engaged in supply chain management of natural rubber and is a world leader in its field, intends to present a digital trading platform for trading in raw materials, as “the violation of the mechanism of the market halved the price of rubber in the last 18 months,” write colesa.ru. The new service, which will be launched in 2019, will be an alternative to the futures markets, which are now set on rubber and do it, according to some traders, with a distortion of the market balance.
“I wish it was the Amazon rubber industry, stated Robert Meyer (Robert Meyer), CEO of Halcyon Agri, which is 55% owned by the Chinese petrochemical giant Sinochem (China). “We’re going to do with the traditional rubber supply chain what Amazon did with retail in its time.”
Since the beginning of the year, the price of futures for the supply of rubber RSS3 in Singapore fell by almost 10%. Part of the reason for this was the recent discounts in the oil market, as well as an overabundance of rubber supplies. “There are too many trees on the plantations now that can yield crops,” the financial Times quoted a trader from Singapore.
According to Mr. Meyer, the reduction in the value of futures contracts on the Singapore exchange leads to an overabundance of supply of Chinese rubber varieties that are not used by world tire manufacturers, but affect prices on the global market due to the connection with Chinese rubber futures-the most liquid in the world. Natural rubber stocks in China increased by 40% to a record 547,000 tons per year.
Mr. Meyer proposes to prevent future distortion of the market with the help of the site where producers and consumers can set prices on a bilateral basis, bypassing the public market. “Users will be able to decide among themselves what prices and volumes of deliveries will be, and to do it daily”, — he noted.
He also added that the service will allow trading in rubber produced in compliance with environmental standards, and will offer financial services to farmers with the involvement of an external partner.
Mr. Meyer did not name the exact cost of the platform, but noted that it would be a “multi-million dollar project”.
“Market participants will need time to start using this platform, — said analyst Warren Patterson ING (Warren Patterson). — For example, if we talk about futures contracts, their implementation can take years. In addition, such a platform will not be enough to solve the problem with an oversupply of supplies, which weakens the market. Most likely, market participants will prefer public futures markets – a more effective representation of global supply and demand — to private services.”