Demand Evolution
Expectations regarding China's demand have improved. Recently, the US increased the import tariff on Chinese electric vehicles from 25% to 100%. This does not have a significant direct impact, as the US represents a small percentage of Chinese exports.
However, if the European Union or other blocs decide to implement similar restrictions, it could be a blow to the growth of the Chinese automotive sector, which is the world's main demander of natural rubber.
Supply Evolution
The poor supply performance in May has been the main explanation for the price increase. Typically, towards the end of May and June, an increase in supply is observed due to seasonal factors, but this is being delayed. Processors' margins are being squeezed, as the prices of primary rubber products have increased more than those of the more processed varieties.
Thailand has been the most affected by the high temperatures generated by El Niño, a situation that could persist for some time. Additionally, heavy rains in recent weeks have complicated the evacuation of production.
India's Rubber Board** reports a supply shortage. The rains in the last half of May were followed by relentless monsoons. This prevented farmers from properly protecting the trees from the rain.
Meanwhile, Malaysia's production reached nearly 27 thousand tons in March, 9.2% less than in February and 0.8% less than in March 2023.