Agri Business

Chinese imports hold the key to short-term prospects of natural rubber prices: ANRPC

V Sajeev Kumar Kochi | Updated on September 16, 2021

Domestic rubber production is expected to reach a record level of 8 lakh tonnes in current season

The course of global natural rubber prices in the short-term will largely be determined by the timing of China’s imminent large-scale imports. This could happen either in September or in October, says ANRPC Rubber Market Intelligence Report.

China is expected to import 1.7 million tonnes to bridge the deficit anticipated during September-December and an additional two million tonnes to meet demand during January-April 2022. The next upswing in physical prices will be determined by the timing of the imports by Chinese manufacturing companies and traders, the report said.

China’s imports

For the whole year of 2021, China is expected to import at least 4.9 million tonnes. Of this, a total quantity of 3.2 million tonnes is estimated to have landed in the country by the end of August. The remaining 1.7 million tonnes have to be imported to bridge the shortfall anticipated during the four months from Sept to December this year.

In 2022, the report says, the four months from January to April represent the off-season of supply in China. Unlike other producing countries, China gives a total lay off to taping during these four months. As the domestic supply is negligibly small, almost the entire quantity needed during this period is usually imported in advance. It is estimated that China may have to import nearly 2.0 million tonnes to meet the demand for 2022.

Depleted inventory

The conditions now prevailing in physical markets are expected to remain unchanged until China begins large-scale imports. There are also reports that total inventory is getting depleted and has reportedly dropped by 190,000 tonnes between the beginning of June and end of August. Chinese manufacturing companies and traders will be compelled to replenish the depleting inventory ahead of the off-season of supply. Thus, physical markets in South East Asia can expect imminent large-scale imports from China very soon. This could be either in September or in October, the report added.

Also see: Cotton harvest likely to be delayed amid flooding in Saurashtra region in Gujarat

Meanwhile, official sources here have expressed confidence that domestic rubber production is expected to reach a record level of 8 lakh tonnes in the current season, thanks to the positive trends like pricing, favourable climate with ample rains, import disruptions and increased acreage under the crop. Last year, production stood at 7.5 lakh tonnes.

Domestic prices, which are ruling above ₹170, have also facilitated farmers who abandoned the crop earlier to re-start tapping. The acreage under adoption has gone up to 30,000 hectares from 14,000 hectares last year following initiatives by the Rubber Board.

Published on September 16, 2021

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