Natural Rubber (TSR) Prices Plunge in June 2023 Across the Globe

Texas, USA: The market trend of Natural Rubber (TSR) showcased a significant plunge in June across the globe. Countries like the USA and Germany mainly rely on imports from Southeast Asian countries to fulfill their Natural Rubber demand, and market fluctuations in the Southeast Asian Natural Rubber market influence the prices globally. In June, Southeast Asian-origin Natural Rubber cargo prices experienced a decline overall due to several factors, such as weak demand, fluctuating futures markets, and subdued global economic conditions. Early in the month, the production costs of foreign processing plants increased owing to a reduced supply of latex caused by heavy rains in Southeast Asian producing regions. However, domestic and international demand for Natural Rubber remained sluggish, further decreasing prices. Consequently, many overseas processing plants lacked the motivation to engage in production and sales due to insufficient profit margins.

However, towards the middle of June, there was a slight recovery in Natural Rubber prices as futures prices improved. Some market participants in China began purchasing goods for restocking purposes at depressed levels, leading to renewed interest in the market. Nevertheless, this rebound did not last long as buyers hesitated to bid higher, resulting in limited trading activities. By the end of June, latex supplies in foreign-producing areas started to increase, but most Natural Rubber suppliers refused to sell their products at low rates due to low inventory levels. Futures markets remained stable, causing Southeast Asia-origin Natural Rubber cargo prices to stay relatively steady. Furthermore, the strengthened US dollar exchange rate restricted buying interests among market participants in China, resulting in scarce inquiries and transactions. Overall, the Natural Rubber industry faced challenges during June due to various external factors that impacted pricing and trade dynamics.

Altogether, though the Natural Rubber production costs surged in June initially, the lack of market inquiries slumped the overall market value of Natural Rubber. During the first four months of 2023, approximately 1.6 million tons of Natural Rubber were exported from Thailand, representing a 3.7% increase over the previous year. The Department of Statistics Malaysia reported that Malaysian Natural Rubber production increased by 6.8% in May 2023, amounting to 25 kilotons. Meanwhile, according to the Association of Natural Rubber Producing Countries (ANRPC), the combined monthly output of Southeast Asian exporting countries exceeded their monthly consumption, leading to a decline in the price of imported materials to the countries like the United States and Germany.

As per ChemAnalyst's anticipation, "The Natural Rubber (TSR) prices are expected to decline further in July on the back of underwhelming downstream demand. However, the prices of Natural Rubber might take an upward trend in August amid optimistic market outlooks."