The International Rubber Consortium (IRCo), the operational arm of the International Tripartite Rubber Council (ITRC), has announced that it expects ‘La Nina’ natural phenomenon to hit South East Asia from November 2017 – January 2018 and bring heavy rains, affecting production of natural rubber in the region.
A meeting of IRCo board of directors on 3 Nov also heard that the natural phenomenon as well as the wintering season which is set to start in the final quarter of 2017, are expected to contribute to a reduction in supply of NR to the global markets.
The board, which consists of representatives from ITRC memebers Thailand, Indonesia and Malaysia, concluded that with the current supply and demand sitution of NR, prices were “not reflective of market fundamentals”.
NR prices have declined sharply to $1.6/kg in Oct since a hike at the beginning of the year, which saw the figure rise to $2.5/kg.
In terms of demand, the IRCo meeting noted strong sentiment favouring demand for NR, including the projected world GDP growth rate of 3.6% in 2017, compared to 3.2% the year before.
Additionally, the meeting cited imporved automotive sales in major markets as another contributor to a rise in demand in the near future.
According to IRCo, the automotive markets in China, EU and Japan grew year-on-year by 4.8%, 3.7% and 7.1% respectively during the first nine months of the year.
Source : https://globalrubbermarkets.com