Rubber and latex prices rise. What are the reasons?

Latex and natural rubber prices remain firm and show increases this week. The increase in prices is driven by a heat wave that negatively affects the yields of natural rubber crops in Southeast Asia, and inflation data in China and the United States, which generate expectations of greater economic growth. Regarding ocean freight, greater shipment cancellations are reported due to lack of capacity.

Inflation in the US and China: Divergent impact on financial and commodity markets

Inflation data from the United States (US) and China pushed up the prices of financial assets and commodities. Curiously, both data registered 0.3% monthly, but were well received by the market for very different reasons. The US data was lower than expected, which increases the probability that the Federal Reserve (FED) will reduce the interest rate. In China, on the other hand, at the beginning of the year the concern was deflation and this is the third month with price increases, which is interpreted as an indicator of improvement in local consumption.

Extreme weather in southeast Asia: Rubber producers suffer consequences of high temperatures

Producers in Southeast Asian countries face extremely hot weather conditions, with temperatures exceeding 44 degrees Celsius and negatively affecting the yield of rubber crops. Although the most extreme conditions occurred in the first half of May, the situation could persist in areas of Thailand in the coming weeks.

US Increases tariffs on chinese electric vehicles: What implications does It have for the automotive and natural rubber sector?

The US raised the import rate for Chinese electric vehicles from 25% to 100%. This does not have a relevant direct impact given that the United States represents a smaller percentage of Chinese exports. However, if the European Union or other blocks decide to implement similar restrictions (China is accused of promoting overcapacity in the sector), it could be a blow to the growth of the Chinese automotive sector, the world's main demander of natural rubber, given that it has been driven mainly by shipments abroad.

Due to the Red Sea crisis, and according to Alphaliner, there is a shortage of 36 vessels (10% of the total tonnage) to cover the Asia-Europe routes. Some lines divert capacity from other routes, which also generates higher prices on these.