Surge In The Natural Rubber (TSR) Market Amid Delayed Rubber-Tapping Process

Laem Chabang, Thailand: In May 2024, the Natural Rubber (TSR) STR 20 followed a bullish market scenario as the market was severely affected by the tight supply of the feedstock Latex market. The raw material production areas were affected by the rainy season which made the producers delay their rubber-tapping process, however, the demand from the downstream Automotive and Tire sector was strong but due to the delayed production resulting in the late shipments, the Natural Rubber (TSR) STR 20 faced an incline in their trend.

In Thailand, the Natural Rubber (TSR) STR 20 market experienced a steep incline of 13.37% and reached USD 1780/MT (FOB-Laem Chabang) in May 2024. The bullish market scenario was attributed to the disruption in the Natural Rubber (TSR) STR 20  supply chain. Due to the tight supply of feedstock Latex, the production cost of Natural Rubber (TSR) STR 20 inclined at a higher rate. The production area for Natural Rubber (TSR) STR 20 in Thailand was affected by the weather conditions in Thailand which impacted the rubber tapping process negatively and hence affected the feedstock market.

Furthermore, the major importing nation of Natural Rubber (TSR) STR 20 was affected by the heavy rainfall as well. In China, the Yunnan production area was hit by a drought, and at the same time, the Hainan production area was affected by the heavy rainfall, therefore, the rubber tapping process for Latex was halted resulting in the supply tightening of the raw material leading to the prices hike for Natural Rubber (TSR) STR 20. Furthermore, the major producer of Natural Rubber (TSR) STR 20, Thailand faced warnings on weather conditions. Thailand’s meteorological agency has issued warnings about "severe weather conditions," predicting "heavy to very heavy rains" and potential "flash floods" from May 17 to 22.

As of May 26, 2024, the total inventory of Tianjiao Bonded and General Trade in Qingdao was recorded at 539,100 tons. This marks a decrease of 8,900 tons or 1.63% compared to the previous period, indicating a notable reduction in stock levels of Natural Rubber (TSR) STR 20. Breaking down the inventory, the bonded zone, which holds goods intended for international trade that are not subject to domestic taxes, had 71,400 tons. This represents a decrease of 1.38%, showing a slight but significant reduction in the amount of bonded inventory. The general trade inventory, which consists of goods traded for domestic consumption and subject to standard import tariffs and regulations, was 467,700 tons. This segment saw a decrease of 1.66%, indicating a more substantial reduction compared to the bonded inventory. Currently, the port of Qingdao is in a state of destocking, meaning that the outflow of goods is surpassing the inflow, leading to a gradual reduction in overall inventory levels. This destocking phase can be attributed to various factors, such as increased demand for Natural Rubber (TSR) STR 20, strategic inventory management by traders, or a slowdown in new shipments arriving at the port. The ongoing reduction in Natural Rubber (TSR) STR 20 stock levels suggests that goods are being actively moved out of storage, to meet market demands and in response to changing trade conditions.

As per ChemAnalyst, the Natural Rubber (TSR) STR 20 is anticipated to face an incline in its trend due to the supply tightening of the raw materials. Furthermore, from mid to late June, the rainy season might contribute to the disrupted rubber-tapping process in Thailand, resulting in increased production costs and ultimately, resulted in heightened prices for Natural Rubber (TSR) STR 20. Tire companies are limiting their procurement activities and are wary of buying high-priced Natural  Rubber (TSR) STR 20 raw materials. Currently, the inventory of Natural Rubber (TSR) STR 20 at ports is steadily decreasing. The Natural Rubber (TSR) STR 20 spot market is anticipated to experience high volatility in early June, with a potential slight decline expected in the middle to later stages of the month.