Global supply of natural rubber is anticipated to remain short of demand till December 2017, according to the Kuala Lumpur-based ANRPC.
Global supply of natural rubber (NR) is anticipated to remain short of demand till December 2017, according to the Kuala Lumpur-based Association of Natural Rubber Producing Countries (ANRPC). The shortfall is expected to progressively widen from April 2017 to reach 688,000 tonne in June 2017, before narrowing down in the subsequent months to reach 46,000 tonne by December 2017.
It is the latest edition of ANRPC newsletter that forecasts the quantum of shortfall in rubber in the global scene. World supply during January to April 2017 was short of demand by 466,000 tonne, according to preliminary estimates. ANRPC secretary general Nguyen Ngoc Bich points out that NR prices seem to be affected by ‘factors external to the sector, despite a deficit supply’.
“NR prices have moved along a falling trajectory from February 2017 largely due to rising US shale gas output and reported failure in the effective implementation of the production curtailment programme, agreed among OPEC members and major non-OPEC oil producing countries.
Low crude oil prices keep sentiments down at Shanghai rubber futures and physical markets often follow suit,” he says, in the ANRPC newsletter.
The analysis from experts is that the current phase of low rubber price is largely a manifestation of a downtrend prevailing in all commodities rather than a phenomenon specific to rubber. The anticipated recovery in crude oil market is expected to fuel sentiments in natural market during the rest of the year.
The International Monetary Fund (IMF) anticipates 18% rise in prices of ‘all Commodities’ during 2017 as compared to 2016. NR market usually gains in tandem with uptrend in all commodities.
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Bich, however, pinpoints in the foreword to the newsletter , that ‘the prevailing strong US dollar’ is an impediment to marked recovery in NR market. US dollar is likely to stay strong unless the US initiates a policy to weaken dollar in an effort to boost the exports, he says. This, in turn, could help the recovery in NR market.