NR producers expect better prices on La Nina, new demand

Bangkok – The International Rubber Consortium (IRCo) has forecast that the ‘La Nina’ climate pattern will bring heavy rains, affecting natural rubber production in the Far East into next January.

A meeting of IRCo board of directors on 3 Nov also heard that the natural phenomenon will impact the wintering season in the final quarter of 2017 and reduce supply of NR to  global markets.

The board, which consists of representatives from ITRC memebers Thailand, Indonesia and Malaysia,  went on to conclude that current NR, prices were “not reflective of market fundamentals.”

NR prices have declined sharply to $1.6/kg in Oct since a hike at the beginning of the year, which saw the figure rise to $2.5/kg.

IRCo, members also foresaw strong sentiment favouring demand for NR including a projected world GDP growth rate of 3.6% in 2017, compared to 3.2% the year before.

Additionally, the meeting cited improved automotive sales in major markets as another likely contributor to a rise in demand in the near future.

According to IRCo, the automotive markets in China, EU and Japan grew year-on-year by 4.8%, 3.7% and 7.1% respectively during the first nine months of the year.