The Association of Natural Rubber Producing Countries (ANRPC) foresees hindrance in the continued recovery of global rubber prices in the short term due to the growing concern of a second wave of Covid-19 pandemic and deteriorating US-China diplomatic relations.
The rise in newly infected cases even in the countries which have successfully managed the spread in the initial phase can hinder the recovery in the global economy and the demand for natural rubber, besides affecting the market sentiment, ANRPC report on ‘NR: Trends & Statistics July 2020’ said.
The deteriorating US-China diplomatic relations is likely to reduce the risk appetite in commodities and stocks. The diplomatic tussle between the two countries over trade, technology, Hong Kong’s national security law, and the claims on the South China Sea has recently worsened. Low speculative investments in commodities and stocks are often reflected in the natural rubber market as well, the report said.
The continued recovery in the crude oil market in the short-term is subject to risks associated with a possible second wave of the pandemic, potential impact of the worsening US-China relations, and implications on oil demand from various other factors hindering the global economic recovery. The NR market often tracks crude oil trends largely due to speculation on possible substitution between natural rubber and petroleum-derived synthetic rubber, the report said.
The world rubber production remains almost unchanged at 13.195 million tonnes, down by 4.5 per cent from the previous year. As Covid-19 is spreading faster than even before, the forecast is subject to downward revision, ANRPC said.