Malaysia's natural rubber price has hit its highest level in 20 years and will continue to surge on strong global demand especially from China, an industry official said according to a report today.

The price of standard natural rubber on the Malaysian Rubber Exchange traded at RM8.48-8.50 per kilo last Friday, more than triple the levels four years ago.

Malaysian Rubber Products Manufacturers' Association vice-president Lim Sum Teck said demand from China's automotive sector will push rubber prices further.

"At the rate the standard Malaysian rubber price is going, I will not be surprised if it hits a peak of RM10 ringgit per kilo by July," Lim told The New Straits Times .

No choice

He said Malaysian manufacturers using natural rubber as a raw material have no choice but to pay the current high price just to maintain their operations but that they are still facing supply problems.

"Traders from China are buying up all the rubber they can for their automotive industry and should this tight situation worsen, I won't be surprised if some Malaysian manufacturers close down," he added.

Analysts have attributed the strong price of natural rubber to robust demand in developed countries and the tight supply of petroleum-based synthetic rubber caused by high oil prices.

Thailand, Indonesia and Malaysia - the world's top three rubber producers respectively - account for some 80 percent of the world's rubber natural rubber output.