The Association of Natural Rubber Producing Countries is bullish on the short-term trends in the global natural rubber market, thanks to a shift in focus of governments across the world from epidemic management to economic recovery.

Helped by the lifting of lockdowns and relaxation of movement restrictions, manufacturing and other economic activities are expected to return to life across countries, including major rubber consuming countries. The policies being launched by various governments to bring economies back to the growth trajectory are expected to give a further boost, the ANRPC monthly report on NR Trends & Statistics for May 2020, said.

Besides contributing to the transport sector and thereby improving the demand outlook for rubber, the report pointed out that the policies can help in boosting business confidence and positive market sentiment.

The uptrend in crude oil will boost commodity prices, which is favourable to rubber because its market usually tracks the general trends in commodities, the report said.

The consumption sector is in the process of returning to action. While world consumption fell by 15 per cent in May, the anticipated decline in June is only 5.3 per cent. Moreover, global consumption growth is expected to exit from the negative territory by July. The improving outlook on world consumption can contribute to positive sentiment, the report added.

However, the ANRPC report also highlighted some risk factors over the possibility of a long-lasting Covid-19 pandemic, which would lead to global economic fallout. Even if the lockdown and movement controls are withdrawn, it may take several months to repair the financial damage caused by the pandemic, especially in countries where stimulus policies are not strong or effective in rebuilding the damage in specific sectors.

The global economic recovery and global trade during the post-containment phase can be hindered by geopolitical issues and trade conflicts. Increasing shift towards protectionism and local sourcing can also weigh on global trade and movement of goods, the report said.

Further delay in developing the Covid-19 vaccine and the possibility of the virus returning in a second wave can also dim the prospects of recovery, adds the ANRPC report.

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