World supply of natural rubber (NR) is anticipated to be in short of demand during 2017, says Association of Natural Rubber producing Countries (ANRPC).
The just released latest statistical analysis of ANRPC says that World supply, including ANRPC member countries and non-ANRPC countries, in 2017 is anticipated at 12.771 million tonnes, up 5.7% from the previous year. World
demand in 2017 is anticipated at 12.817 million tonnes, up 1.8% from the previous year. The anticipated 5.7% rise in supply in 2017 is after a 1.4% fall recorded in the previous year (2016) and 0.5% average annual fall recorded during the three years from 2014 to 2016. But, the anticipated 1.8% rise in demand in 2017 is over and above a 3.5% increase in the previous year (2016) and 2.8% average annual increase recorded
from 2014 to 2016.
World supply is estimated to have increased by 5.1%, year-over-year, during the first four months of 2017. Thailand and Indonesia account for more than 60% of the world supply of NR. While production increased 6.7% in Indonesia, it decreased 7.1% in Thailand during January to April 2017 on annualised basis.
World supply during January to April 2017 was short of demand by 466,000 tonnes, according to preliminary estimates says the report adding that despite a deficit supply, natural rubber prices have moved along a falling trajectory from February 2017 onwards largely due to factors external to the sector. Crude oil prices sharply fallen from February 2017 due to rising US shale gas output and reported failure in the effective implementation of the production curtailment programme agreed among OPEC members and major non-OPEC oil producing countries. Low crude oil prices keep sentiments down at Shanghai rubber futures and physical markets often follow suit.
Strikingly, the current phase of low rubber prices is largely a manifestation of a downtrend prevailing in all commodities rather than a phenomenon specific to rubber., points out the report. Sentiments in commodity markets are affected by US Federal’s indication of a further upward revision of policy interest rates which is expected in June 2017. This has reportedly made US bonds more attractive to speculative investors and prompted them to shift from Asian commodities. “Due to financialization of commodity markets and greater influence of speculative funds in determining commodity market trends,prices need not always reflect the conditions prevailing in supply and demand” the report adds