The stability continues: Neither demand nor supply takes off

Latex and natural rubber prices continue to fluctuate without a clear trend in recent days. For now, China's recovery does not seem to be driving a significant increase in natural rubber demand, fostering a slightly bearish market sentiment, especially given the prospect of tariff hikes by the United States. However, production challenges continue to provide a floor for prices. The improvements seen over the past month have not been sufficient to rebuild stocks, and short-term weather forecasts for Thailand are once again unfavorable.

China's rubber demand remains stagnant amid stock liquidation expectations

China's economic outlook is clouded by risks of declining exports to the United States. However, the government's economic stimulus measures are showing some results, evidenced by improvements in consumption, industry, and, to a lesser extent, the battered real estate sector. Despite this, these developments have yet to translate into increased physical demand for natural rubber. Adding to the pressure is the possibility of China auctioning off its rubber reserves to refresh older stock. If realized, this could create downward pressure due to a temporary oversupply. The magnitude of the impact will depend on the volume auctioned.

Short-lived relief: Weather complications return

Improved weather conditions over the past month were one of the main factors that allowed prices to retreat from the peaks reached in September. However, the outlook is turning bleak again. Monsoon activity is expected to affect several provinces in Thailand, with a risk of flooding in the south that could disrupt rubber tapping.

Additionally, high rainfall levels are likely in parts of Indonesia, eastern Vietnam, Cambodia, and areas of Malaysia through late November and early December. This will likely constrain supply in the short term.

Trump confirms tariff hikes

Donald Trump, the next president of the United States, confirmed this week that he will impose 25% tariffs on imports from Canada and Mexico, as well as a 10% increase on tariffs for Chinese goods.

These tariffs are set to take effect on January 20, when Trump assumes office. These protectionist measures could slow global growth and negatively impact commodity prices like natural rubber, particularly if retaliatory actions by other nations lead to a trade war, as affected countries have warned.