Amidst Sufficient Supply and Steady Demand Gum Rosin Prices Fall in the Brazil Market

In mid-Q3 2023, Gum Rosin prices witnessed a downward trajectory across the South American market on account of weak cost pressure from upstream prices. The moderate downstream demand, as well as sufficient supply, has weighed down the prices of Gum Rosin in the regional market.

According to the ChemAnalyst database, prices of Gum Rosin have inched lower in South America, particularly in the Brazilian market. The cost pressure from feedstock Pine trees was limited in the given time frame. The manufacturing firms operated steadily on the supply side as demand from downstream industries had not fully recovered. Despite the port congestion brought on by the drought in the Panama Canal, the level of inventories remained sufficient amidst a decline in new orders, supporting the Gum Rosin prices to follow a downtrend. However, it is anticipated that if downstream demand rises, it might impact the supply of Gum Rosin in the upcoming months.

Market players reported that the demand for Gum Rosin from the downstream paints and coatings, adhesives, and sealants, as well as from the rubber industry, has been steady in the domestic market as the offtake from the automotive sector has mainly been based on a need-on-demand basis. According to the Associacao Nacional dos Fabricantes de Veiculos Automores (ANFAVEA), Brazilian vehicle sales (including trucks and buses) in August 2023 of 207,743 units represented a modest decline of 0.4% compared to August 2022. The drop in sales was due to the end of provisional measures that offered discounts on vehicle purchases. Conversely, Brazil's automotive production (cars, trucks, buses) reached 2276,000 units in August, 24% more than in July and 4.6% less than in August 2022. However, demand from the other sectors, such as construction, paper, and pulp, was sufficient, but it didn't lead to an increase in the price realization of Gum Rosin. On the other side, the annual inflation rate in Brazil has accelerated from 3.99 percent in July to 4.61 percent in August 2023 after the central bank cut interest rates for the first time in three years, which eased consumer purchasing power. However, Brazil's export-intensive economy reported a drop in orders from overseas markets, especially from Europe, amid firm inflationary pressure and high-interest rates, so to stimulate better sales, manufacturers keep their prices decreasing throughout the month. As a ripple effect, Gum Rosin FOB Santos prices were settled at USD 1127/MT with a month-on-month decrement of USD 47/MT during August 2023.

As per ChemAnalyst's anticipation, prices of Gum Rosin are projected to increase in Brazil due to the rise in demand from the paints and coatings, adhesives, printing inks, and rubber industry. The feedstock Pinewood prices increase, which will positively impact the prices of Gum Rosin. In addition, the material availability is anticipated to be inadequate amid port congestion caused by the continuous drop in water level in the Panama Canal.