Rubber and latex prices continue on the upward price path that has been in place for the past two weeks or so. The recent reasons? On the financial side, the FED finally lowered the interest rate, which pushed most commodity prices higher. Also on the demand side, there is speculation that low inventories in China will boost demand in the short term. And supply? Production continues to be affected, no longer by typhoons, but by heavy rains in the main Asian producers.
The FED cut the interest rate by 50 basis points.
The US Federal Reserve cut the interest rate by 0.5%, from 4.75%-5.0% to 4.25%-4.5%. The decision was already largely discounted by the market, although there were doubts as to whether the cut would be 0.25% or 0.5%.
The cut was in the higher range of expectations, which pushed up the prices of major global assets, particularly many commodities (including natural rubber and latex).
Expectations for new consumption stimulus in China drive rubber purchases.
Chinese President Xi Jinping called on officials to strive to meet the 5% annual growth target.
The expectation of new measures led to speculative purchases of the commodities most consumed by China, including natural rubber, boosting its price. Prices were also affected by the lower-than-expected inventory data from Quingdao.
Supply problems continue.
Low production due to heavy rains and flooding continues to support prices.
Oil prices bounce and so do synthetic rubber prices.
After falling below USD 70 per barrel, crude oil recovered about half of the decline and is approaching USD 75 per barrel. The recovery is motivated by the drop in rates and the postponement of the production increase by the Organization of the Petroleum Producing Countries (OPEC). With the improvement in oil prices, synthetic rubber prices also rebounded, indirectly boosting natural rubber.