For most of the week, natural rubber and latex prices fell, correcting much of the rise from the previous week. However, on the last day, they regained momentum, especially in latex.
The decline is explained by expectations of slower growth in China and falling oil prices. Despite the markets absorbing the news, latex and rubber prices remain relatively high due to the low supply of natural rubber.
Bad weather will continue to affect supply in the coming weeks, but by October, if the situation normalizes, we could see a price drop due to weak demand.
Oil crashes and drags down natural rubber.
The price of a barrel of oil fell from USD 80 to 73 in one week, driven by weak demand from China and prospects for production recovery in Libya, where the main oil fields are blocked by political conflict. The drop in oil negatively affected other commodities, and natural rubber was particularly impacted.
This happens not only because oil is a key component in the cost of all value chains, but also because it is the basic input for the production of synthetic rubber, which in some cases acts as a substitute for natural rubber.
China disappoints and pulls markets down.
China's industrial activity numbers were once again below expectations, marking the fourth consecutive decline in August, according to the official indicator.
Several investment banks have revised down their growth projections for this year, lowering expectations from a growth range of 4.9% to 5.1% to a range of 4.6% to 4.8%.
The U.S. economy also raises doubts.