Latex and natural rubber prices have been showing slight fluctuations for about three weeks, without a clear upward or downward trend. This week, both increased by about 2.5%, but still remained within the range observed during July. China's economic situation continues to be the main bearish factor in the market, but this is offset by higher demand in the rest of the world and some supply issues in India that could lead to increased imports from this country.
Decline in China’s Industry and Concerns Over Lower Export Orders.
Preliminary indicators of industrial activity in China measured a significant decline in July, which could imply lower demand for natural rubber. This time, both the official measurement and the private one prepared by the Caxin group coincided.
The latter had been showing positive data in previous months due to the good performance of exporting firms, but in July it experienced an unexpected drop. Particularly surprising was that the survey revealed a decrease in future export orders.
External sales have been sustaining the Chinese economy amid weak local consumption, but there is a risk that they may slow down in the coming months, especially towards 2025 if a potential electoral victory of Donald Trump in the United States results in higher tariffs and a greater trade war.
Natural Rubber Shortage in India Could Trigger Imports
Latex prices in the Koyattam market, India, have significantly diverged from values in Thailand and Malaysia, due to a local shortage that has even impacted a more than 10% drop in tire production.
The situation is expected to normalize with an imminent increase in imports, which will imply an increase in international demand for rubber and could raise prices in other markets in the short term. In other news from producing countries, a year-on-year drop of 13.4% in Thailand's production in the first half of the year was confirmed.
Supply is believed to have begun to recover from July, although it is still below normal levels today.
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