Natural Rubber Prices Rise Due to Low Inventory Levels

Rubber prices increased this week due to ongoing supply issues (rains in Southeast Asian producing regions) and a drop in Chinese inventories, which have reached very low levels. This is partly due to the rotation of old stocks, which have not yet been replenished, as well as limited purchases in recent weeks. The decline in stocks is expected to drive some recovery in purchases in the coming weeks, causing prices to rise in anticipation.

Rubber prices | U$S/100Kg

Improvement in China’s industry but doubts resurface in the real estate sector.

Economic stimulus measures appear to be having a positive impact on China's industry. According to the Purchasing Managers’ Index (PMI), industrial activity saw a slight increase in November, performing better than expected. The private indicator prepared by the Caixin group, which excludes data from large state-owned enterprises, showed even stronger results, exceeding expectations.

On the other hand, the real estate sector remains a concern. New property sales in November fell by 6% year-on-year and 16% compared to the previous month. This represents a significant disappointment, as the previous month marked the sector’s first positive value of the year.

It seems the effect of stimulus measures in this sector has been very short-lived.

Falling inventories in China.

Natural rubber stocks in Shanghai are at minimum levels. This is due to the recent rotation of old inventories, as well as low purchasing activity caused by supply challenges.

Once the inventory rotation is completed, restocking will be necessary, which could support short-term price increases.

Perspectivas de crecimiento de precios para 2025.

The World Bank projects a 3% growth in natural rubber prices over the next two years. Although modest, this increase is significant given the sharp rise in prices throughout 2024.

The report warns that the greatest risks are to the downside, particularly if an oversupply of automobiles in China forces a reduction in production.

EUDR regulation suspended.

The European Union has postponed the enforcement of its anti-deforestation policy by one year, now set to take effect at the end of 2025. Small and medium-sized enterprises will have until June 2026 to comply.

Additionally, the classification of countries as “low risk” has been suspended. This controversial classification allowed certain nations to be exempted from compliance with unclear criteria.