China pent-up demand set to buoy natural rubber markets

Kuala Lumpur – Natural rubber (NR) markets have been partially hinged on an ongoing power supply crisis in China, which has ‘severely affected’ industrial manufacturing in the country over the past few months.

In its latest market analysis, the Association of Natural Rubber Producing Countries (ANRPC) said China’s ‘return to normalcy’ in terms of power supply would be a “pivotal factor” in determining the short-term pace of NR markets.

While ‘detrimental’ in the long-run, the crisis can generate pent-up demand, ANRPC noted in its analysis.

According to the association, the power supply situation is widely expected to be improved by the time China reopens on 8 Oct after its ‘golden week’ holiday.

Natural rubber prices were volatile during the month of September, with markets tracking a V-shaped recovery in the final week of the month. 

According to ANRPC, the strong recovery amid a series of hindering factors revealed “the inherent strength of the market fundamental to be resilient in the short-term.”

Citing “authentic sources”, the association said that China is expected to consume 1.490 million tonnes of NR in the fourth quarter of 2021.

To cater to the demand from manufacturing sector, China is anticipated to import 1.267 million tonnes of NR in the fourth quarter, a move that is expected to positively impact prices. 

Despite the electricity shortage affecting manufacturing, China consumed 507,000 tonnes of NR in August and 500,000 tonnes in September, according to ANRPC.