Natural Rubber Price Trend and Forecast

Natural Rubber Price Trend for the Second Half of 2023

Asia

In the third quarter of 2023, the prices of natural rubber witnessed a gradual decline due to the weak demand from the tire and adhesive industries. The production rates in the region were reduced and as a result, the offtakes declined. In addition to this, the supply remained abundant leading to stockpiling, further aiding the price decline. The fourth quarter was also identical to the previous one in terms of demand. Additionally, crude oil and natural gas prices fell, further contributing to the falling price trends for natural rubber.

Europe

The third quarter was favourable for the natural rubber market as the prices inclined due to stable demand from the tire and adhesive industries. The increased prices of raw materials drove the production costs further aiding the price rise.  However, the fourth quarter did not follow these steps and the prices declined as a result of weak downstream demand. The automotive sector took the biggest hit and with the fall in the prices of crude oil, the price trend of natural rubber struggled to remain afloat in the fourth quarter.

North America

The price trend frequently fluctuated in the North American region as the rise in production and excessive supply declined the prices in August. However, the disruptions in the supply chains and increase in demand resulted in an incline in the prices of natural rubber towards the end of the third quarter. In the fourth quarter, the prices declined gradually as the automotive sector saw sluggish demand and the cost of production along with crude oil and natural gas fell aiding in the declining price trends for natural rubber.

Analyst Insight

According to Procurement Resource, the price trends for Natural Rubber are expected to show a mixed trend in the upcoming quarter given the rise in the momentum of the automotive sector and demand outlook globally.

Natural Rubber Price Trend For the First Half of 2023

Asia

According to ANRPC, the global outlook for natural rubber looks positive for the current year. The price of natural rubber on the Singapore Commodity Exchange- one of the vital international exchanges for rubber, went from 1.97 USD/kg in January 2023 to 2.03 USD/kg in June 2023. The prices peaked in March 2023, averaging 2.12 USD/kg.

The price trends for the commodity were partially mixed in the Indian Domestic market. Despite the strong market demand, the market suffered from many uncertainties in the form of labour shortages, off-tapping season, adverse climate, surging crude oil prices, and delayed shipment of supplies which aggravated the supply tightness in the following months. In March, the futures contract of natural rubber averaged 168.90 INR/kg on Multi Commodity Exchange.

The contract price of SMR 20 – majorly imported by tyre manufacturers, averaged 129.51 INR/kg, and that of Latex averaged 123.44 INR/kg. The futures contract prices (May 2023) of natural rubber averaged 161.69 INR/kg or 13.47 RMB/kg on Shanghai Futures Exchange. For Latex, the price averaged 123 INR/kg, and that of RSS4 averaged 171 INR/kg.

In the Chinese domestic market, natural rubber prices fluctuated a bit. The prices went from 164.41 USD cents/kg in May 2023 to 163.65 USD cents/kg in June 2023. This fall in the prices of the commodity was due to the reduced activity caused by covid-19 restrictions coupled with the plunging confidence of the buyers/traders in the market conditions.

Europe

Owing to the current geopolitical tensions, crude oil prices surged worldwide, causing the costs of synthetic rubber to inflate. These inflated prices raised the demand and consumption of natural rubber in the market, thereby driving its price trends towards the higher end of the scale. There has been a continuous hike in its prices since the start of the current year. Prices of RSS3 grade averaged 181.8 eurocents/kg in January.

North America

During the first half of 2023, the prices of US natural rubber averaged between 2.79 USD/kg to 2.91 USD/kg or 2789.89 USD/MT in New York and Washington DC.