Natural rubber supply tightens on seasonal shortage, geopolitical tensions

Kuala Lumpur – Natural rubber (NR) pricing experienced a marked uptick during the month of March, the Association of Natural Rubber Producing Countries (ANRPC) has reported.

Stronger pricing trends were observed as supply tightened in key markets for block rubber, ribbed smoke sheet and latex, said the Kuala Lumpur-based organisation.

While, it said, production grew 2.1% year-on-year to 786,000 tonnes during March, the upstream sector of the NR industry “continued to grapple with tight supply.”

Seasonal leaf-fall period, increased demand in China as well as international developments impacted supply during the month, ANRPC explained in its latest monthly review.

“Geopolitical factors have historically influenced supply-chains and global logistics,” said ANRPC, noting current events such as the Russia-Ukraine conflict, instability in Africa, and tensions in the Middle East.

According to ANRPC, managing supply-chain risks has become progressively more complex for global companies due to conflicts around the world.

Meanwhile, it said, "escalating tariffs between major economies, and regulatory shifts such as import/export bans have disrupted access to crucial resources and markets.” 

Additionally, attacks on shipping routes have forced companies to seek alternative transport options, leading to logistical hurdles.

In terms of the supply outlook, ANRPC forecast production to improve by 3.4% on a year-to-year basis in the next month, spurred by a price-rebound observed since the start of the year.

For the full year, the association revised up its production outlook to 14.542 million tonnes, up 1.6% compared to last year and 0.1 percentage point compared to previous estimates.

This revision stems from the improved outlook in China and Myanmar throughout the year, ANRPC added.

Demand in the month of March, meanwhile, grew 1.9% year-on-year to 1.3 million tonnes, according to the ANRPC report.

Global demand for 2024 has been marginally adjusted downward from the previously reported 15.826 million tonnes to 15.670 million tonnes, reflecting a slower growth rate of 3% year-on-year.

The revision is attributed to a decrease in China's projected demand for 2024, which now stands at 7.352 million tonnes compared to the previously reported 7.500 million tonnes.