Natural rubber prices may rise a tad in short term: global producers’ body

Sajeev Kumar | | | Updated on: Dec 06, 2021

Supply woes, rising crude oil prices and US dollar could aid trend, says ANRPC

Natural rubber prices in the global market are expected to see marginal improvement in the short term fuelled by higher demand, supply constraints, rising crude oil prices and the US dollar, the Association of Natural Rubber Producing Countries (ANRPC) has said.

However, the second wave of the Covid-19 pandemic in India, along with the slow progress of the vaccination drive, could limit the demand growth as well as recovery in prices. The anticipated rise in supply, starting from June, can also cap prices, said ANRPC’s Rubber Market Intelligence Report.

With the rise in daily infection cases, the second Covid wave has trimmed the outlook on the demand for rubber from India. However, the lower demand from India could be offset by the higher consumption expected in China, the US and Europe, helped by the rapid economic recovery following the progress in the vaccination drive.

Covid second wave saps rubber

Global supply of rubber is expected to improve beginning from the last week of May, coinciding with the wintering of rubber trees. Compared to May, the production during June is expected to be 15.8 per cent higher. However, the increase in supply is expected to be marginal on account of factors such as disruptions caused by the recent increases in newly infected Covid cases in Thailand, India, Malaysia, Cambodia, and Sri Lanka.

Taskforce on rubber recommends to treat NR as agricultural product

The supply-chain disruptions caused by the continuing shortage of shipping containers, and the resultant shipment delay and supply uncertainty, can compel a section of end-use manufacturing companies to increase their inventory of natural rubber by deviating from the just-in-time strategy. Manufacturing companies might opt for domestic sourcing of rubber, wherever it is possible, by offering a higher price rather than going for low-cost sourcing from overseas.

According to the ANRPC report, natural rubber prices are expected to receive the support of the crude oil market. The progress in the vaccination drive and the resultant renewed economic recovery momentum are expected to support crude oil prices, at least in the short term.

Published on May 10, 2021
This article is closed for comments.
Please Email the Editor

You May Also Like

Recommended for you