WASHINGTON—There is a current worldwide natural rubber supply shortfall of about 700,000 metric tons, according to recent reports from the Association of Natural Rubber Producing Countries.
Despite that shortfall, NR pricing has declined since the beginning of 2017, ANRPC data show.
Standard Malaysian Rubber 20, or Malaysian tire-grade rubber, began the year Jan. 3 at 205.9 U.S. cents per kilogram, and enjoyed an increase to 242.95 cents by Jan. 31, according to the association. Prices sank slowly through the spring to 138.1 cents on June 23 before edging up to 161.7 cents July 20.
By July 27, SMR 20 slipped again, to 152.6 cents per kilo. Other grades of rubber tracked by the ANRPC and its members showed similar patterns in the first seven months of 2017.
"NR Markets Close Out the Month Marginally Higher" was the headline for rubber trading firm RCMA Group's July 31 newsletter. NR prices struggled to recover from a slump on Chinese commodity markets the previous week, the RCMA newsletter said.
The world NR supply shortfall stood at 688,000 metric tons by June 2017, according to the ANRPC. However, the association said the shortfall would narrow to 466,000 tons by September and 103,000 tons by December.
Any number of factors contributed to the anomalous supply-demand situation, according to the ANRPC. Bad weather in Thailand early in 2017; speculation in Asian commodity markets, especially Tokyo and Shanghai; and the strength of the U.S. dollar against Asian currencies all played a part.
The biggest factors, however, were low prices for raw materials, especially oil, and the reluctance of small NR farmers in Southeast Asia to tap or replant trees in a time of rock-bottom prices.
All of these make the supply and pricing picture unclear at best through the end of 2017, according to ANRPC Secretary General Nguyen Ngoc Bich.
Three factors in particular are likely to continue to the end of the year, according to Nguyen.
"Firstly, there will be more tapped areas to be discarded or abandoned," he said. "Secondly, the opening for tapping of young trees in some areas will be further postponed.
"Thirdly, the low productivity of rubber trees in the non-traditional areas will not be changed substantially."
Because of low prices, some NR farmers are expected to reduce harvesting and delay resumption of tapping of wintered trees, the ANRPC said in the June 2017 issue of its monthly publication, Natural Rubber Trends & Statistics.
In addition, the members of the International Tripartite Council (IRCo)—Thailand, Indonesia and Malaysia—announced plans in July to adopt "export restriction measures" to try to stabilize NR prices. The leadership of IRCo did not respond to requests for comment.
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