Trends and challenges in the rubber market

This week, rubber prices fell, although they remain at relatively high levels. On the other hand, the price of latex continues to increase. According to data provided by the Association of Natural Rubber Producing Countries, the market showed a slight adjustment during the first two months of the year, although less pronounced than initially expected. February economic data from China has generated some disappointment, however its interpretation is made difficult by the impact of the New Year festivities. Furthermore, after the recent Houthi attacks that led to the first fatalities, a total suspension of traffic in the area has been requested.

Economic challenges in China during February

The economic indicators for February in China revealed a negative outlook, largely attributable to the peculiarity of the month. The concentration of Lunar New Year festivities during this period made it difficult to accurately assess the situation. Car sales, for example, suffered an estimated drop between 15% and 20% year-on-year, while the real estate sector faced a 60% collapse in sales in yuan, a trend that adds to that already registered in January, when the decrease was 34%.

Natural rubber production report by ANRPC

The Association of Natural Rubber Producing Countries (ANRPC) has published its production report for January and February. Although the supply estimates presented by this institution suggest a more favorable situation compared to the projections of private consulting firms, they still indicate a tight market. During the first two months, supply remained almost constant at approximately 2.24 million tons, a figure close to that of the previous year, defying expectations of a decrease. In contrast, demand experienced a growth of 3.8%, reaching 2.44 million tons, resulting in a deficit of 200 thousand tons.

Possible rate cuts according to the FED
A Federal Reserve (FED) official raised the possibility of a rate cut towards the third quarter of the year. However, this move would be carried out after a careful evaluation of the response of investors and the evolution of inflation, which indicates a cautious stance in the face of current economic challenges.

Impact of the conflict in the Red Sea: New tensions and risks for maritime trade

In the midst of the conflict in the Red Sea, three sailors lose their lives in a
 Houthi attack, marking a critical point in the escalation of violence. This tragedy could trigger further suspensions in shipments passing through the area, with calls from business chambers and governments for a complete suspension.
Shipment reliability drops to 51.6% in January, posing additional challenges for international trade.