Agri Business

Global natural rubber supply will be hit by Covid-19 spread in producing nations: ANRPC

V Sajeev Kumar Kochi | Updated on June 14, 2021

Local restrictions will affect the availability of workforce, transportation network and supply-chain logistics, says the ANRPC report

The rising Covid spread in producing countries is likely to limit the seasonal rise in global natural rubber supply, which will remain constrained unless the pandemic infections flatten, and the situation markedly improves.

With the wintering season of rubber trees having already ended, the global supply is expected to increase in the wake of resumption of tapping by farmers. But the restrictions imposed by respective governments will affect the availability of workforce, transportation network and supply-chain logistics, says the Rubber Market Intelligence report prepared by Association of Natural Rubber Producing Countries (ANRPC).

Also read: Field trials of drought-tolerant GM rubber set to start this month in Assam, says Rubber Board

The natural rubber demand from the US, the UK and the Euro-area is expected to make robust recovery driven by the improved economic recovery. However, the demand from rest of the world is likely to be constrained on account of factors such as slowdown in China’s manufacturing sector; the constrained demand from India and the ASEAN regions in the short-term; a subdued demand from Taiwan, South Korea, Thailand and Vietnam in view of the potential anti-dumping action by the US against auto-tyre manufacturing companies operated in these countries.

In short, the global demand for natural rubber will not be able to fully gain from the expected robust economic recovery in the US, the UK and the Euro-area, the ANRPC report said.

Crude oil prices

The report also pointed out that crude oil prices are likely to remain favourable to the natural rubber market in the short-term, as the fuel demand is anticipated to gain from the robust economic recovery in the US and Europe. The US dollar is expected to stay favourable to commodities, as the currency is unlikely to gain strength as long as the Federal Reserve does not go for higher interest rates.

Besides, the rising global inflation is likely to keep speculative traders away from the Shanghai Futures Exchange (SHFE) because they anticipate possible policy intervention by China to tame the inflation. Speculative traders may be taking cautious steps in the short-term in anticipation of higher policy interest rates and borrowing cost. The policy announced by China to clampdown unhealthy speculation and abnormal increases in commodity prices can discourage speculative traders from commodities.

While there are factors favouring a rally in natural rubber prices in the short-term, the set of negative factors is likely to limit the gains, the report added.

Published on June 14, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor