ANRPC reports improvement in natural rubber market sentiment

Kuala Lumpur – The Association of Natural Rubber Producing Countries (ANRPC) has seen a “notable improvement” in natural rubber (NR) market sentiment over the first two months of 2024 – despite ongoing global economic concerns.

In its latest NR review for January and February, ANRPC linked the change largely to an “unexpectedly tight supply of rubber, as many NR-producing countries enter the seasonal leaf fall period.”

Average February rubber prices for SMR-20 (Kuala Lumpur); STR-20 (Bangkok); RSS-3 (Bangkok) and RSS-4 (Kottayam) grew by 1.9%; 6.2%; 12.8% and 3.6% respectively compared to the month before, it noted.

The price rises reflected the impact of factors including leaf-fall disease and adverse climate conditions, which have exacerbated the supply challenges, said ANRPC.

Furthermore, it added, supply issues have been compounded by a reluctance among rubber smallholders to harvest trees due to “protracted low rubber prices”.

“This issue [of low prices] persists amidst the growing emphasis on sustainability within the NR industry, with the voices of smallholders often going unheard,” said secretary general Heng Guan Toh.

These “supply-side dynamics” have significantly contributed to the overall improvement in market sentiment, the ANRPC leader added in his latest monthly review.

Regarding the near-term market outlook, ANRPC said external factors, such as the US interest rates, the Red Sea crisis and crude oil developments could influence the NR market in the coming months.

For instance, it said, the continued Red Sea shipping crisis could result in further rising global supply-chain costs and delay the delivery of shipments by about two weeks.

Unresolved geopolitical conflicts, continued the association, could have “ripple effects”, leading to further trade disruptions as well as other “repercussions”.

Furthermore, upcoming elections in Russia, India and the US may also play “an influential role” in global economic development.

Meanwhile, based on current estimates within the NR industry, seasonal factors could also slow down the supply of rubber potentially resulting in a supply-deficit, concluded ANRPC.