Kuala Lumpur – The broad sentiment in the natural rubber market remained muted in the month of August due to a number of factors, including high levels of inventory in China.
In its monthly update issued 25 Sept, the Association of Natural Rubber Producing Countries (ANRPC) said stocks were high at the designated warehouse of the Shanghai Rubber Futures Exchange and the warehouses in Qingdao Free Trade Zone.
Additionally, the seasonal factor is favouring supply and contributing to weak NR prices.
External factors, such as mounting US-China trade war and the sharp appreciation of the US dollar, which resulted in outflow of speculative funds from Asia, also contributed to low natural rubber prices.
Currencies of major NR-exporting countries, said ANRPC, suffered “major setbacks” against the US dollar over the past few weeks.
The world production of NR rose 1.3% year-over-year to 8,510 million tonnes during the first eight months of 2018, according to ANRPC.
Global consumption rose 5.5% year-on-year to 9.342 million tonnes over the same period, widening the deficit gap to 832,000 tonnes compared to 786,000 tonnes at the end of July.
The mismatched growths in production and consumption, said ANRPC, helped absorb a portion of the surplus accumulated in the previous years.
NR production was hampered by heavy flooding in southern India over the months of July and August and leaf disease in some other natural rubber producing countries.