Natural rubber prices will likely gain in the short-term in the global market on impending seasonal short-supply and increasing demand from China, the Association of Natural Rubber Producing Countries (ANRPC) has said.

ANRPC’s Rubber Market Intelligence report has projected higher imports by China till January 2022 on account of the pre-Lunar New Year Demand. Chinese manufacturing companies are expected to build up NR inventory ahead of the week-long holiday for the Lunar New Year on February 1 due to seasonal supply shortage coinciding with the annual wintering of rubber trees in major producing countries.

China is expected to consume around 5,00,000 tonnes each during December and January 2022. However, the report went on to add that the positive effect of the favourable supply-demand fundamental would be partly offset by potential strengthening of the dollar, the restrictions imposed against the spread of the Omicron strain of Covid, lack of momentum in the crude oil market, and the continuing standoff in the auto sector due to chip shortage.

The market in the short term is expected to continue to receive support from short supply. The world supply of rubber is expected to decline due to the seasonal factor.

The world rubber economy during the year 2021 is likely to end with a deficit of around 200,000 tonnes (world supply: 13.882 million tonnes; demand: 14.076 million tonnes). The new restrictions imposed across Europe against the spread of the Omicron variant and the resultant concerns over the demand outlook for rubber can negatively impact the rubber futures market.

According to Santosh Kumar, Executive Director, Harrisons Malayalam Ltd, Indian production has badly suffered during October and November -- which are high cropping months -- due to unseasonal and heavy rains that disrupted tapping. This has constricted the supply in the market. The cropping window has been shortened to a period of maximum two months of December and January.

However, early defoliation noticed in central and south Kerala pockets is a concern as this can bring down the production as growers stop production after leaf-fall. The issues of reduced availability are expected to keep prices tight though some price reduction is being noticed in December on account of better arrivals.

“The current drop is not sustainable and prices will look up by the middle of January as production comes down. Weather conditions had been very uncertain and erratic this year and growers are pinning hopes on some early rains and better soil moisture for early refoliation and better crops “, he adds.

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