SINGAPORE—The impact of the COVID-19 pandemic on the global rubber market will be broadly similar to that seen during the financial crisis of 2008-09, independent consultant Hidde Smit has forecast.
In an analysis posted on the International Rubber Study Group website, Smit noted that, in fourth quarter of 2008 and first quarter of 2009, total rubber consumption dropped 15.8 percent and 12.2 percent, respectively, as financial uncertainty hit demand for vehicles and tires. This was followed by a rebound in rubber consumption, with increases of 20 percent and 12.4 percent, respectively, in the second and third quarters, and demand restored to pre-crisis levels by early 2010.
Natural rubber consumption followed a similar track: declines of 8.5 percent and 17.6 percent for the fourth quarter of 2008 and first quarter of 2009, followed by increases of 10 percent and 10.3 percent in next two quarters.
As the COVID-19 pandemic continues, Smit expects to see a repeat of this general pattern, starting with declines of 11.9 percent and 13.6 percent in overall consumption in the first two quarters of this year.
In volume terms, this equates to a drop in consumption, from 7.1 million metric tons in the final quarter of 2019 to 5.4 million tons in second quarter of 2020.
Smit expects this negative trend to be followed by a 25.4 percent rebound in consumption in the third quarter of 2020, reaching as much 6.8 million tons.
Nevertheless, this year will see declines of 11.2 percent in total rubber consumption and 10.6 percent in NR consumption, Smit's analysis shows.
The analysis also shows a sharp drop in global NR production in the first quarter of this year, reflecting declines in both consumption and prices. Still, Smit forecasts a general pattern of recovery to 2022.