The prices of natural rubber and latex continue to rise, contrary to what most analysts projected at the beginning of the month. The rise is driven in part by some complications in production, but fundamentally by a higher than expected level of economic activity globally. In particular, automobile exports in China continue to rise, increasing demand for rubber. Can we expect a decline in the coming weeks with the start of the high production season?
Increase in natural rubber demand driven by activity in China
Improved activity in China leads to an increase in demand for natural rubber. The latest data show uneven growth, with a slowdown in consumption but good data at the industrial level, which is driven by exports. The automotive sector is a clear example of this. Total sales of vehicles produced in China grew 9% year-on-year in April, with the main boost coming from sales abroad.
New Stimulus Measures for the Real Estate Sector in China
In turn, new stimulus measures for the real estate sector were announced this week, including the possibility for local governments to purchase idle properties for social housing, and credits for the purchase of apartments (a specific package of USD 42 billion). These measures aim to improve the situation of one of the most important sectors for China's growth.
Global Growth Prospects Improve: UN Revises World GDP Upwards
The United Nations improves the outlook for global GDP growth from 2.4% to 2.7%, (2.8% in 2025), with an improvement for the United States and emerging economies such as Brazil and India.
Impact of Rains in Thailand and production expectations on the rubber market
On the supply side, problems are once again observed due to heavy rains in Thailand. However, many analysts expect prices to begin to decline given that the high production season is about to begin. For our part, we understand that current prices may represent a temporary peak, but we do not clearly see a fundamental change in supply and demand conditions to predict a significant drop.
Trends in the Logistics Sector: Challenges and opportunities in the face of High tariffs and Port congestion in LATAM
High rates encourage an increase in capacity destined for LATAM. At the moment, this is not enough to lower prices as services to Brazil continue to face space limitations. The southern ports remain congested, generating more delays especially in the Port of Vitória, Navegantes and Santos.