Commodities

India, ASEAN rubber demand may sap on slow rate of Covid vaccine jabs

V Sajeev Kumar Kochi | Updated on July 05, 2021

Factors like container-shortage, delays in ports, rising freight costs, etc. are likely to hit the demand from the West

The Association of Natural Rubber Producing Countries (ANRPC) is anticipating a weak demand for rubber in India and the Asean region in the short term, thanks to the slow rate of Covid vaccinations.

Though the Covid infection rates are on the decline since mid-June, India still has 0.9 million active cases. While only 3.4 per cent of the total population is vaccinated, a third wave of the pandemic is expected to arrive in a few States. Major rubber consuming countries in the Asean region are also constrained by the slow rate of vaccination, said the Rubber Market Intelligence report of ANRPC.

Also read: Rubber Research Institute decodes genome of popular Indian hybrid clone

Given such a situation, the report projected a weak demand for rubber in view of the longer time required to attain herd immunity and reopening of economic activities in India and other Asean consuming countries.

Besides, the slow vaccination rates outside the US and the Europe could delay the restoration of economic activities and the resurgence in natural rubber demand. The emerging conditions in the demand and supply, as well as key non-fundamental factors do not favour a noticeable recovery in rubber prices in the short-term.

Factors affecting demand

While the economic rebounds in the US and Europe are expected to drive the demand for rubber, the report said that a set of factors like container-shortage, delays in ports, rising freight costs, anticipation of the resurgence of the cases after easing of lockdown etc. are likely to hit the demand from the West.

In China, which accounts for more than 40 per cent of the global NR consumption, the demand is expected to remain soft with the emergence of the new Delta variant wave, the report added.

The wintering off-season of natural rubber supply has ended in major rubber producing regions. Although the continued disruptions from the pandemic-related control measures can have a partial bearing on the supply in a few countries, the global supply is expected to be considerably higher from June onwards.

Speculative traders are likely to stay away, or take extremely cautious steps in the Shanghai Futures Exchange due to a combination of factors such as rising inflation rate, policy intervention by China by hiking interest rates, slowdown in Chinese manufacturing sector etc. More specifically, the rubber futures traded on the Shanghai Exchange are likely to see lack of strong buying interests or the much-needed fuel for scaling highs, the report added.

Published on July 05, 2021

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