ANRPC expects pick-up in NR output as prices recover

Kuala Lumpur – World production of natural rubber (NR) is set for partial recovery after registering an 8.9%, decline to 6.7 million tonnes during the first seven months of 2020, according to the Association of Natural Rubber Producing Countries (ANRPC).

Following a 1.5% fall in the first quarter and a 16.1% fall in the second quarter, the global NR output declined 9.5% in July 2020, said ANRPC in its latest monthly trend update 10 Sept.

Production, it said, is anticipated to recover partly during the third quarter on account of the continuing recovery in NR prices, improving demand especially from China and further relaxation in movement restrictions.

Citing figures by individual producing countries, ANRPC said the world output is expected to reach 3.5 million tonnes in the third quarter, down 1.5% from the same quarter last year.

For the full year, the association slightly revised down production figures to 13.149 million tonnes, representing a 4.9% fall from the previous year. The figure also reflects a decline from ANRPC’s forecast a month ago, which anticipated a 4.5% decline in production to 13.195 million tonnes.

The association also expects a partial recovery in the consumption of NR in the third quarter, after an overall 14.0% decline in the first seven months of the year. 

China, which posted a 3.2% economic growth in the second quarter, will be the key driver as consumption in July - at 456,000 tonnes - nearly matched the previous year’s level of 464,000 tonnes.

Other contributing factors will be a ‘faster-than-expected’ recovery in the US economy and the presidential elections in November. 

A rebound in the vehicles production and sales, especially in China, and people’s preference to travel by own personal vehicles in the wake of Covid-19, will also help drive consumption. 

The ANRPC expects demand to decline 2.9% during the third quarter, with “marked improvement” compared to a 15.0% and 15.8% declines posted in the first and second quarters respectively. 

For the full year, consumption rates have been revised down to 12.5 million tonnes, down 8.9% year-on-year. The figure also reflects a 1.6% drop compared to ANRPC’s outlook reported last month, which anticipated demand to come in at 12.754 million tonnes in 2020.