Revival in Chinese economy, US’ stimulus package expected to spur rubber demandThe Association of Natural Rubber Producing Countries (ANRPC) expects an upturn in global rubber prices in the last few months of 2020 spurred chiefly by a rebound in the manufacturing sector in China, pick-up in the automobile sales in India and anticipated stimulus package in the US.
The revival in economic activities in the dragon nation with a progressive improvement in manufacturing and the domestic auto sales would lead to a substantial increase in Chinese volume of rubber imports, according to ANRPC.
China is anticipated to consume 1.38 million tonnes of rubber in the fourth quarter of 2020 which closely matches with the quantity of 1.40 mt consumed during the same quarter in the previous year. China is expected to import 1.6 per cent more quantity during 2020 compared to the total volume imported in the previous year, ANRPC report on ‘NR Trends and Statistics’ said.ANRPC has marginally scaled up the outlook of rubber consumption in India and the manufacturing activities are restoring momentum and auto sector taking a U-turn in the country.
US’ stimulus
It is pointed out that the increased stimulus offers in the US at $1.8 trillion is expected to keep sentiments positive in commodities and stocks. A major stimulus package for the world’s largest economy can substantially contribute to global economic recovery besides improvement in crude oil prices.
The report said the second wave of the pandemic can aggravate an already constrained supply of rubber particularly in Thailand, and to a limited scale in other producing countries due to the continued labour shortage and mobility restrictions. This could again push up the prices.
Peak season
The fourth quarter (October-December) is considered as the season of peak production of rubber worldwide. A highly attractive price can unlock more supply of rubber into the market and due to potential enthusiastic response of the farmers. Attractive price can prompt farmers to adopt various short-term measures for extracting the maximum output from their existing trees, the report said.
The global rubber production fell 8.7 per cent during January-August to 7.778 million tonnes. Accounting a 3.8 per cent fall anticipated in the remaining four months of the year, the total production during the full year would be at 12.901 mt, a 6.8 per cent fall of the previous year.
The consumption declined 11.7 per cent to 8.151 mt during January-August. In view of the restoration of economic activities across countries, the consumption sector expected to perform relatively better in the remaining months, ANRPC said.
