For the Quarter Ending December 2023
The North American Natural Rubber (TSR) market experienced notable volatility and price surges during the fourth quarter of 2023, primarily driven by several factors. Firstly, the introduction of the new EU Deforestation Regulations (EUDR) introduced uncertainty in the Southeast Asian rubber sector, resulting in a reduced supply of Natural Rubber in the global market. This constrained supply had a significant impact on market sentiments, leading to a bullish market scenario.
Secondly, the US automotive sector experienced strong demand for Natural Rubber, driven by robust vehicle sales and steady production, despite challenges such as strikes by union auto workers. Additionally, the increased cost of importing Natural Rubber from South-Asian countries further supported the price incline in the USA market.
Throughout the quarter, the supply of Natural Rubber decreased, with low inventories to meet demand. The demand for Natural Rubber in the US market was moderate to high, driven by the automotive and construction industries. The quarter ended with the price of Natural Rubber TSR 10 CFR Texas in the USA at USD 1760/MT.
In the APAC region, the market for Natural Rubber (TSR) in the fourth quarter of 2023 witnessed several significant factors that influenced prices. Firstly, the implementation of new regulations by the European Union (EU) aimed at stopping deforestation caused disruptions in the Southeast Asian rubber sector. This led to an influx of material availability in the international market, resulting in a drop in prices.
Additionally, the demand for Natural Rubber in the Indian market remained moderate to high, driven by a strong performance in the domestic automotive industry. The increase in demand coupled with expensive imports from South-Asian countries further supported the price incline in India. Furthermore, the supply chain demonstrated signals of expansion as industrial output rose, but inventories remained low to moderate.
It is important to note that no plant shutdowns were reported during this quarter. The price of Natural Rubber TSR 10 CFR JNPT in India at the end of the quarter was USD 1675/MT. Overall, the market for Natural Rubber in the APAC region during the fourth quarter of 2023 was influenced by the EU regulations, demand from the Indian market, and supply chain dynamics.
The fourth quarter of 2023 proved to be a challenging period for the Natural Rubber (TSR) market in the Europe region. One of the primary factors impacting the market was the new regulation policies implemented by the European Union to stop deforestation, which threatened widespread disruption for Southeast Asia's rubber sector. This led to uncertainties and concerns among suppliers and exporters in the Southeast Asian markets. Furthermore, the German domestic market saw a temporary easing of discussions for Natural Rubber due to the destocking efforts by Southeast Asian suppliers. This provided leverage to market participants across Europe and resulted in less resilience from Southeast Asian suppliers during price negotiations.
Germany, being a major player in the European market, experienced a bullish outlook for Natural Rubber prices. The demand for Natural Rubber in Germany was influenced by factors such as the growth in the automotive and tire industry and improved consumer buying interest during the holiday season. However, the growth in downstream industries, including automotive and construction, remained flat, which led to a moderate to high demand for Natural Rubber in the market.
In terms of pricing trends, Natural Rubber TSR 10 CFR Hamburg in Germany saw a 4% increase in prices during the quarter, with the quarter-ending price standing at USD 1660/MT. The price change percentage from the previous quarter was 10%, indicating a significant increase in prices. Additionally, there was a 7% price percentage comparison between the first and second half of the quarter in Germany. Overall, the Natural Rubber market in the Europe region faced challenges and uncertainties during the fourth quarter of 2023, primarily driven by the new EU regulations and destocking efforts by Southeast Asian suppliers. Despite these challenges, Germany experienced a bullish market with increased demand and higher prices for Natural Rubber.
For the Quarter Ending September 2023
In the third quarter of 2023, the North American Natural Rubber market witnessed a consistent surge in pricing, primarily driven by robust demand from various industries in the USA. This demand surge was particularly pronounced in the automotive sector, backed by a 15.4% growth in domestic car sales in July, indicating a strong expansion in the automotive industry. Furthermore, August saw a notable increase in natural rubber prices in the US market, which can be attributed to a 2% growth in US vehicle sales compared to July, and an impressive 16.2% year-over-year increase. Additionally, in September, despite a strike initiated by the United Auto Workers (UAW) union against major Detroit Three automakers, the US automotive sector managed to achieve a total of 1.33 million units in new vehicle sales. This achievement was remarkable, considering the potential supply chain disruptions due to the strike. The consistent growth in the US automotive industry was due to factors like improved availability, fleet shipments, and customer incentives. This, in turn, led to higher consumption of natural rubber. The price increase was also influenced by the relatively expensive imports of natural rubber from South Asian countries.
During the third quarter of 2023, the Asia-Pacific region experienced fluctuations in Natural Rubber prices, with Malaysia being a focal point of activity. In July, the surge in Natural Rubber prices was driven by increased orders from global markets, such as the USA, Europe, and various Asian countries. The demand for Natural Rubber outpaced its production, creating a supply-demand imbalance and boosting prices. August saw a 13% increase in vehicle sales in Malaysia, attributed to improved industry performance, supply chain conditions, and promotional campaigns. Several Asian countries relying on Malaysia for Natural Rubber imports also experienced growth in automobile sales. However, Natural Rubber prices remained stable in August due to production and consumption reaching a balance in July. Prices rose in September due to escalating crude oil prices, which increased production costs and the market price of synthetic rubber. This prompted businesses to opt for Natural Rubber in their manufacturing processes, increasing demand. In August, the Natural Rubber market faced uncertainty due to geopolitical tensions and Federal Reserve interest rate hikes, leading to market challenges. However, the market showed resilience in the latter half of August as optimism regarding the economic outlook and market sentiment improved and caused a surge in Natural Rubber prices in September.
During the third quarter of 2023, the European Natural Rubber market experienced consistent price increases, notably in the German market. In July, Natural Rubber prices surged in Germany due to heightened demand from the automotive sector. The trend continued itself in August and the demand was driven by a significant 37.3% growth in new passenger vehicle sales, largely attributed to a remarkable 171% year-on-year rise in electric vehicle (EV) sales. This EV surge was prompted by impending business buyer incentives that were set to expire on September 1st. Furthermore, in September, German consumer prices saw a year-on-year increase of 4.3%. Inflation had decreased to its lowest level since the Russia-Ukraine conflict's onset, suggesting potential relief from high inflation in Europe's largest economy. On the other hand, passenger car sales in Germany experienced a 0.1% decline in September, marking the first decrease since January. This downturn was primarily driven by a significant 28.6% drop in battery-powered electric vehicle sales, following the discontinuation of an environmental subsidy for commercial buyers. Despite the decline in automotive sales, natural rubber prices continued to rise in the German market in September, driven by expensive imports from South-Asian countries. The overall trend in the third quarter was characterized by strong automotive demand and fluctuating inflation, impacting the natural rubber market in Germany.
For the Quarter Ending June 2023
During the second quarter of 2023, the North American market saw a steady decrease in the prices of Natural Rubber. The downstream automotive and tire industry performed exceptionally well during the quarter, with a 20% increase in vehicle sales in the month of June. However, Natural Rubber prices continued to decline. The North American market is mainly import-driven, with Malaysia and Thailand being the major exporters of Natural Rubber. In the first four months of 2023, Thailand exported approximately 1.6 million tons of Natural Rubber, which is an increase of 3.7% compared to the same period last year. According to the DoSM, Malaysian Natural Rubber production in May 2023 grew by 6.8%, reaching 25 kilotons. According to the ANRPC (Association of Natural Rubber Producing Countries), the monthly output of exporting countries such as Malaysia and Thailand remained above their monthly consumption, decreasing the price of imported material to the USA. As a result, Natural Rubber prices in North America continued to decline amid increased supply of Natural Rubber and overflowing inventories.
Unlike North America's market trend, Natural Rubber's prices showcased a mixed trend in the Asia-Pacific region during the 2nd quarter of the year as the Natural rubber price showcased an upsurge in April followed by a consistent decline. The downstream auto and tire industries performed very well in the quarter, with increased sales and industrial output. However, the price of Natural Rubber continued to fall in the second half of the quarter. Asian countries such as Thailand and Malaysia are the world's largest Natural Rubber producers and exporters. In the first four months of 2023, Thailand exported about 1.6 million tons of Natural Rubber, up 3.7% year-on-year. According to DoSM, Malaysia's natural rubber production increased by 6.8% in May 2023 to reach 25 thousand tons. According to ANRPC (Association of Natural Rubber Producers), monthly production in exporting countries such as Malaysia and Thailand exceeded the monthly consumption in June. As a result, Natural Rubber prices in the APAC region continued to fall due to increased Natural Rubber supplies and excess inventories. Furthermore, the import orders from North American and European regions have fallen due to the abundant availability of Natural Rubber in the country compared to its offtake.
The market trend of Natural Rubber in Europe showcased stability in the first month of Q2 2023, followed by a consistent plunge in prices. The downstream automotive & tire industry did exceptionally well during the 2nd quarter, with 20% growth in vehicle sales in June. However, prices of Natural Rubber continued to decrease. Imports mainly drive the Natural Rubber market in European countries. Malaysia and Thailand are the main exporters of natural rubber. Thailand exported approximately 1.6 MT of Natural Rubber in the first four months of 2023, which is 3.7% higher than the same period of last year. In May 2023, the DoSM reported that Malaysian Natural Rubber production increased by 6.8% to 25 Kilo tons. The monthly output of exporting countries like Malaysia and Thailand remained higher than their monthly consumption, which decreased the cost of imported materials to Europe. Natural Rubber prices continued to decrease in Europe due to an increase in natural rubber supply and overflowing inventories.