KUALA LUMPUR—A series of factors, including a new COVID-19 outbreak in China and automotive supply-chain disruptions in the U.S., drove down natural rubber prices in the first half of June, the Association of Natural Rubber Producing Countries has reported.
More than 100 cases of Delta-variant COVID-19 infections were detected in Guangzhou City, the capital of the southern Chinese province of Guangdong.
The outbreak led to partial lockdowns in the province, according to the ANRPC's rubber market intelligence report, issued June 18.
As a result, operations were suspended at the Yantian container terminal which, said the association, is considered to be "pivotal" to the country's manufacturing and trading activities.
The development, it said, impacted "already constrained shipping logistics and port operations" in China, with knock-on effects on trade.
In addition, a new wave of COVID-19 infections in the ASEAN region, as well as higher raw materials costs and the global microchip shortage, further slowed down production in China.
Industrial manufacturing in China fell 8.8 percent year-over-year in May 2021 compared to a growth of 9.8 percent posted in April, ANRPC said, citing June 16 data by the National Bureau of Statistics.
Also contributing to the downtrend was a slowdown within the U.S. tire sector, which was hit by global logistics disruptions and delays.
"Increases in freight and raw material costs, delays at ports and high inflation are affecting profit margins in the manufacturing sector ... and the tire manufacturing industry is no exception," the report noted.
Furthermore, with the ending of the wintering season in all major producing countries, harvesting has resumed despite the constraints caused by the pandemic-related restrictions.
As a result, rubber supply "markedly improved" during the months of May and June, negatively affecting prices.
Other key factors included U.S. moves to impose antidumping tariffs on Asia-based tire makers and a Chinese government' intervention to tackle soaring commodity prices, ANRPC said.
ERJ's analysis shows that natural rubber prices fell noticeably across Far East futures and physical markets during the two weeks to June 15.
In Shanghai, the most active rubber contract for September delivery contracted by 6.2 percent during the period, while Japan's Osaka and Singapore's Sicom futures reported 3.5 percent and 3.8 percent declines, respectively.
In Kuala Lumpur, latex 60 percent prices fell 12.2 percent during the period, while SMR20 prices declined 4.4 percent.
Bangkok also reported 5.2 percent and 6.3 percent declines in prices for STR20 and RSS3 rubber commodities during the two-week period.