Brazilian Gum Rosin Offers Revised Upward on Curtailed Supply and Improved Demand Dynamics

Santos, (Brazil): In South America, the Gum Rosin market ended June on a firm note, marking a departure from the downtrend observed over the past month. Initial price announcements are mainly characterized by rising raw material costs coupled with recovery in downstream derivative demand. Additionally, the tight supply of Gum Rosin has further escalated the prices of Gum Rosin in the regional market.

According to ChemAnalyst's database, prices of Gum Rosin have shown an increment of USD 36/MT in the Brazilian market. The cost support from feedstock Pinewood was sufficient for Gum Rosin as its prices increased throughout the month, leading to an upward shift in the price realization of Gum Rosin in the domestic market. Furthermore, producers of Gum Rosin have lowered their production due to the flooding as a result the material availability was observed on the lower end in the domestic market prompting the manufacturers to raise their offers. However, several market participants expect, that operating rates might improve in the near term.  

On the other side, the demand for Gum Rosin from the downstream paints and coating, rubber as well as from the adhesives industry has improved in the domestic market due to a rise in consumption from the key end-user automotive and construction sector, leading to bullish market sentiment of Gum Rosin among the manufacturers. As per the market sources, Brazil's vehicle production rose by 26.6% in June 2024 compared to May, with manufacturers producing 211,035 units up from 166,733 units. Year-on-year production rose by 11.6% in June 2024, reflecting a strong rebound in automotive manufacturing driven by recovering domestic demand, which boosted Gum Rosin's demand despite export market challenges. Consequently, prices of Gum Rosin FOB Santos were settled at USD 996/MT during June 2024.

In the broader economic context, Brazil's inflation grew 4.23 percent year-on-year, slightly above 0.21 percent in May. However, the overall inflation rate in June was lower than expected, providing some relief for policymakers dealing with rising prices. Moreover, the Central Bank of Brazil (BCB) decided to keep the Selic rate unchanged last month, breaking a trend of rate cuts.

Looking ahead, ChemAnalyst anticipates prices of Gum Rosin might remain bullish in the Brazilian market due to a rise in demand from the key downstream industry. Also, inquiries from the overseas market mainly North- America and Europe are likely to improve to restock the inventories. Moreover, feedstock Pinewood prices are projected to increase which may lead to high manufacturing costs of Gum Rosin in the regional market. Furthermore, the level of inventories might continue to be tight.