scorecardresearch

Expect natural rubber price reversal only after Q1, says ANRPC chief

The NR demand outlook do not favour the prices gaining strength in the short term, Premadasa says, in the foreword to the latest issue of the ANRPC bulletin “Natural Rubber Trends and Statistics”.

ANRPC comprises of 13 countries who contribute 90% of the global production and 65% of the global consumption of NR.
ANRPC comprises of 13 countries who contribute 90% of the global production and 65% of the global consumption of NR.

Even though China may come back to post-coronavirus normal by the end of March, natural rubber (NR) consumption in key consuming countries may not pick up, says Kuala Lumpur-based Association of Natural Rubber Producing Countries (ANRPC). As the virus has been continuing to spread to more than 90 countries, the outlook on world consumption of NR is likely to undergo a downward revision.

ANRPC secretary-general RB Premadasa unequivocally says that “a (price) trend reversal can be expected only by the turn of the first quarter”.

The NR demand outlook do not favour the prices gaining strength in the short term, Premadasa says, in the foreword to the latest issue of the ANRPC bulletin “Natural Rubber Trends and Statistics”.

World consumption of NR is anticipated to grow by 1.2% to 13.824 million tonne in 2020, says the rubber trade body. Following economic slowdown and “crisis” in the automobile sector, trade uncertainties and geopolitical factors, the world NR consumption had fallen 1% to 13.7 million tonne in 2019, compared to 2018.

ANRPC comprises of 13 countries who contribute 90% of the global production and 65% of the global consumption of NR.

ANRPC bulletin says that coronavirus could impact economy in three ways. One, by directly affecting production. Two, by causing supply chain and market disruption. Three, by its financial impact on firms and financial markets, since delayed shipments and production schedule can be detrimental to the firms having inadequate liquidity. The bulletin cites UNCTAD’s (United Nations Conference on Trade and Development) preliminary analysis report that works out that “slowdown in manufacturing in China could result in a $50-billion decrease in exports across global value chains”.

As for the final NR consumption projections in 2020, “it is too early to gauge the full impact of the outbreak of coronavirus on the demand prospects of NR”.

Despite slowing major industrial activities in China, the disease has generated additional demand for hygiene products such as rubber gloves, the report observes.

Meanwhile, the global production of NR in 2019 fell 0.7% to 13.8 million tonne, due to a fungal disease that affected over 1.2 million acres of yielding rubber trees. Although the total harvested area in the member countries expanded by 8,67,000 acres to 23.5 million acres last year, the average yield fell 8% to 1.12 tonne per acre, the ANRPC says. The organisation puts the onus of reduced yield on “poor maintenance of rubber holdings” and a “substantial fall” in demand from China and India.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

Most Read In Market