How is supply and demand influencing the rubber market?

How is global demand evolving in the rubber market?

Impact on China: February economic data in China reflects a negative trend, especially in the real estate market, with a 31% drop in property sales. Although there are no official figures yet, a decrease of 21% in February in automobile sales is estimated, which would leave the data for the first two months approximately 10% above 2023. This suggests a slowdown in growth and a lower level of sales in at the end of the year. Surveys on industrial activity, for their part, are inconclusive. The official indicator again showed a drop, but Caixin's private measurement, which excludes large public companies and focuses more on SMEs, showed an increase.

Outlook for the first two months: Despite the challenges, global rubber demand grew by 3.8% during the first two months, reaching 2.44 million tons, according to the Association of Natural Rubber Producing Countries (ANRPC).

US Growth: Meanwhile, the US economy continues to show sustained growth, with discussions of a possible rate cut by the Federal Reserve in the third quarter, subject to investor response and inflation.¿Cómo está evolucionando la oferta de caucho en el mercado global?

Production report: According to the January-February report of the Association of Natural Rubber Producing Countries (ANRPC), the supply has remained stable, reaching 2.24 million tons, generating a deficit of 200 thousand tons compared to the demand.

Impact of the wintering period: With the arrival of the wintering period, a decrease in production is anticipated due to the change of leaves on the rubber trees. This year, an even larger deficit is expected, with early signs of a protracted process, estimated at one million tons by the consulting firm WhatsNextRubber.

Supply challenges: Normally this deficit is covered by the surplus from the end of the previous year. Here are some differences between sources. Although ANRPC estimated a good end to the year for production, other consulting firms have noted that the accumulation of stocks has not been sufficient due to Thailand's poor performance. The drop in this country's exports (24% year-on-year in January) seems to prove them right, although it is also true that other countries such as Vietnam and the Ivory Coast have had a very positive productive performance. In any case, at the end of the day all sources agree in highlighting a complicated outlook for supply, with the magnitude of the deficit being the main discussion.