Market analysis: scarcity, optimism and challenges

The latex products market continues to experience a favorable period due to temporary supply shortages. Although the announcement of China's GDP growth target for 2024 and a first positive inflation data in six months have generated some optimism, caution is necessary. The shortage of supply continues to be the main support for prices, something that would continue for the coming months, but could change towards the middle of the year with the end of the El Niño phenomenon. Can we now talk about the end of deflation? A closer look at the data indicates that it may be too early.

Inflation in China: Early signs of recovery

Consumer prices in China show a year-on-year increase of 0.7%, much higher than the expected 0.3%.
 breaking a six-month streak of deflation. However, the impact of the Chinese New Year and the persistent decline in wholesale prices suggest that it is too early to declare an end to deflation. 

Challenges for Economic Growth in China in 2024
The Chinese government has set an ambitious 5% growth target for 2024, signaling that it is determined to push forward pro-growth policies but faces considerable challenges. The need to reduce the fiscal deficit while stimulating economic growth is complicated by the continued decline in the real estate market, the latest data shows that property prices fell 1.4% in February and an accumulation is estimated significant amount of unsold properties equivalent to 3 years of sales. Vanke, another of the largest real estate developers, began negotiating a debt restructuring to avoid default.

Prospects for natural rubber production in Asia

Inflation in the United States exceeded expectations in February, with a monthly increase of 0.4%. This data could indicate a positive boost for the US economy amid concerns about inflation.

Prospects for natural rubber production in Asia
With El Niño expected to weaken from April, improvements in natural rubber production are expected in Indonesia and Thailand towards the second half of the year, which could ease tensions in the global market.

International negotiations to address Red Sea attacks

The United States is in talks with Iran, through intermediaries such as Oman, to address attacks in the Red Sea attributed to the Houthis. These diplomatic efforts could have significant implications for stability in the region.