Weather disruptions, butadiene rebound to support NR prices

Kuala Lumpur – El Nino-related weather disruption and a rebound in butadiene prices are expected to lend support to natural rubber (NR) prices, according to the Association of Natural Rubber Producing Countries (ANRPC).

In its monthly NR report, published 31 July, ANRPC noted that geopolitical tensions and macroeconomic uncertainty continue to cloud the market outlook.

The market, it said, is navigating a "complex landscape" shaped by macroeconomic pressures and supply-side constraints.

Among the main headwinds, the association cited renewed US-China tariff tensions and the re-escalation of conflict in the Middle East.

These factors, said ANRPC, have weakened global economic sentiment and dampened demand for rubber-based products, including tires and gloves.

The US Federal Reserve's decision to maintain interest rates at 3.50-3.75% has also strengthened the US dollar, affecting cross-border trade flows and NR pricing, ANRPC added.

The association also pointed to the global shift toward electric vehicles, particularly across Southeast Asia, Latin America and South Korea, as a trend likely to reshape long-term demand for NR.

On the supply side, however, El Nino-induced dry weather is disrupting rainfall in major producing countries including Thailand and Indonesia.

ANRPC described this as a "major bullish factor", even as NR supply is expected to increase with the start of the peak production season.

The association also highlighted the recent rebound in butadiene prices due to disruptions linked to the Middle East conflict.

This, it said, has maintained a favourable price differential for NR despite lower crude oil prices, which it said are expected to reduce synthetic rubber costs.

ANRPC also noted that the EU's decision to impose anti-dumping duties of up to 45.3% on Chinese passenger car and light truck tires has created additional trade friction.

However, it concluded, recent revisions to the EU Deforestation Regulation (EUDR), excluding certain rubber products from mandatory oversight, offer "some relief" for exporters.