Rubber prices without a clear trend

Natural rubber prices moved downward this week, while latex prices rose slightly. Quotes continue to fluctuate without a clear trend but with some volatility.

Donald Trump's back-and-forth decisions are not helping to calm the market. Although a negative impact on prices due to tariffs imposed on China is already expected, he has temporarily reversed—at least for a month—the imposition of new tariffs on Canada and Mexico, partially offsetting this effect.

The final tariff levels he will apply to each country and the potential retaliatory measures remain uncertain.

We maintain the projection of high prices without a clear trend in the first months, followed by a downward trend as we enter 2025. Meanwhile, the Suez Canal authorities are attempting to restore traffic through the canal, so far with very limited success.

Trump's trade policy reversals

Trump announced a 25% tariff on imports from Canada and Mexico and a 10% tariff on imports from China. However, he ultimately postponed the measures against his neighbors for one month in exchange for commitments on border security and anti-drug trafficking efforts.

In contrast, the 10% tariffs on China have come into effect, and the Asian giant responded with 15% tariffs on coal and liquefied natural gas and 10% tariffs on products such as oil and agricultural machinery.

This has mixed effects on natural rubber prices: the trade war reduces global demand, but the suspension of tariffs on North America provides some relief to the market. The Peterson Institute for International Economics has estimated the impact of these tariffs on both countries.

The U.S. tariffs on China would reduce China’s GDP by 0.1% by 2030, while the impact on the U.S. would be 0.9%. If we also consider China’s retaliatory tariffs on the U.S., the estimated GDP loss is 0.3% for the U.S. and 1.1% for China.

Most notably, this last effect will impact natural rubber demand given China’s importance as a buyer, ultimately leading to lower prices.

Possible strike at one of the world’s largest natural rubber plantations

Workers at Firestone’s rubber plantation in Liberia will go on strike on February 6, 2025, demanding higher wages, better benefits, and the inclusion of contract employees in their union. Firestone, which has operated in Liberia for a century, has faced criticism for its treatment of workers.

Although its annual production is estimated at 30,000 tons, the strike could cause a slight upward impact on rubber prices, as it represents only 0.2% of global production.

Trump quer mais produção de petróleo, mas tem condições para isso?

Trump reaffirmed his intention to increase U.S. oil production and urged OPEC to do the same to lower prices. However, his power is limited. Oil companies' decisions depend more on the market than on the government, and OPEC has indicated that it will maintain its strategy without considering Trump’s requests.

Still, a moderate oil oversupply is expected in 2025 due to weak Chinese demand, increased production in the U.S. and Guyana, and possible minor OPEC cuts. This would put downward pressure on prices, likely influencing natural rubber prices in the same direction.