Kuala Lumpur – Natural rubber (NR) prices are expected to rally in the short-term as supply continues to be restrained globally, according to the Association of Natural Rubber Producing Countries (ANRPC).
Despite the end of the wintering season in the northern hemisphere, the rise of Covid cases in a number of producing countries and travel restrictions imposed on workforce will impact tapping, said a market intelligence report on 4 June.
Furthermore, travel restrictions will also impact supply as they affect transportation network and supply chain logistics, ANRPC pointed out.
Also contributing to an expected rise in prices is the ‘robust recovery’ in demand from the US, UK and Europe.
Higher crude prices, on the back of economic recovery in the US and Europe, as well as a weak dollar are also set to support NR prices, ANRPC noted.
While the factors favour a price rally in the short-term, ANRPC said that a set of negative factors will likely limit the gains.
These include a slowdown in China’s manufacturing sector, due mainly to higher raw material costs, shortage of components, and supply-chain disruptions.
In addition, a resurgence of Covid in India and other ASEAN nations such as Malaysia and Thailand will impact short-term demand, according to ANRPC.
A potential anti-dumping duty by the US on tires from Taiwan, South Korea, Thailand, and Vietnam can also reduce NR demand from the said countries, the market intelligence report added.