What is driving the fall in Natural Rubber prices?

The decline in natural rubber prices continues due to signs of weakness in demand. In China, a drop in natural rubber imports is observed despite the rebound in industrial activity. In the United States, economic activity data was much worse than expected by the market. The low supply moderates the fall for now, although it could be accentuated as we enter the period of greatest seasonal supply.

Why do Natural Rubber prices continue to decline?

Even when supply remains limited (we are closing the season of lower production), natural rubber prices fall due to demand indicators. In the case of latex, the price in Bangkok is holding up after the sharp decline the previous week, but other indicators are falling.

The mystery of Natural Rubber imports in China: What does it mean for prices?

The most important, and surprising, fact is that despite the recent rebound in economic activity, imports of natural rubber from China fell sharply in the first quarter of the year. Particularly in March, they decreased 17% year-on-year, which can in part be explained by the high existing stocks. These new data generated a more pessimistic view of the natural rubber market and drove a drop in prices.

Economic challenges in the United States: Impact on markets and monetary policies

The United States GDP grew 1.6% in the first quarter of the year. This is a performance much lower than the 2.4% expected by analysts. In turn, it was reported that the inflation measurement used by the FED to analyze its monetary policy (the PCE) grew at an annualized rate of 3.4% in the first quarter, well above the 1.8% with which it closed. the fourth quarter of 2023. Given this situation, the possibility that the Federal Reserve will hold interest rates grows. Both data brought pessimism to the financial markets and generated declines in the main assets and prices of some commodities.

Logistical challenges on Latin America-Asia routes: Shortages and port congestion

• According to CH Robinson, routes between Latin America and Asia operate at 80-90% capacity. In Brazil, a shortage of containers is being reported in some ports such as Vitoria, Navegantes and Santos, which generates port congestion.
  

• At the international level, some rate increases are observed, breaking with the decrease observed since February, but it is expected that they will soon be compensated with an increase in capacity.