For the Quarter Ending March 2024
North America
During the first quarter of 2024, the Natural rubber market in North America experienced notable price fluctuations influenced by several factors, resulting in a volatile pricing environment. The quarter concluded with Natural rubber priced at USD 1740/MT CFR Houston, showing an average quarterly increase of 9.39%.
A significant driver of these price changes was the sustained demand from the downstream sector, prompting bulk orders and subsequent proactive price hikes by market participants. Geopolitical tensions and trade disruptions, such as disturbances in crucial shipping routes like the Red Sea and the Suez Canal, also played a role in the price volatility. These disruptions led to higher freight charges and logistical bottlenecks, further impacting pricing dynamics. North America's heavy reliance on Natural rubber imports, particularly from China, was a notable factor influencing market trends. Fluctuations in Chinese production, including pauses during the Lunar New Year and Spring Festival, resulted in constrained shipments and limited US inventories, prompting market players to adjust their quotes to protect profit margins.
In exporting regions, prices surged due to insufficient inventories and delayed supplies, prompting US market players to make bulk orders to ensure ample stocks, which worsened the price hike. External factors like the National Oceanic and Atmospheric Administration's warning of potential Mississippi River bottlenecks for the third year in a row due to warm, dry spring weather and low winter snowpack added to worries about shipment disruptions. This led to increased inquiries from US market players to exporting nations, further driving up prices.
Asia Pacific
In Q1 2024, the Natural rubber market in the APAC region, particularly in China, experienced notable price fluctuations but maintained an optimistic trend, with prices steadily rising. By the end of the quarter, Natural rubber's price in China reached USD 1885/MT FOB Shanghai, showing an average quarterly increase of 2.13%.
This positive pricing trend was driven by several factors. Increased demand from downstream sectors, along with rising raw material costs like Natural latex, contributed to the price hike. Limited supply and transportation challenges further pushed prices up. International demand also intensified, especially after the Lunar New Year break, stimulating a resurgence in the market. Despite temporary slowdowns during the holiday period, both regional and global interest in Natural rubber bounced back strongly. A robust export market in China supported prices, although transportation delays and higher shipping costs due to increased demand posed challenges. Overall, the market is experiencing price increases due to scarcity, with demand outpacing supply, indicating a need for market equilibrium. Moreover, external factors such as trade disruptions in the Red Sea have exacerbated the situation, resulting in escalated freight costs and diminishing foreign orders.
Europe
During the first quarter of 2024, the European market for Natural rubber, particularly in CFR Rotterdam, Germany, experienced pricing fluctuations influenced by several factors. Despite concluding at USD 1460/MT with a modest 7.67% quarterly incline, the market generally trended upwards due to heightened demand from downstream sectors. This demand surge, along with global supply chain disruptions, especially in the Red Sea region, caused shipment delays and material shortages, thereby driving prices up. Currency fluctuations, such as the Euro's depreciation against the dollar, further complicated matters, impacting import costs and freight charges.
The German Natural rubber market experienced a significant recovery, marked by rising prices and a balanced supply-demand scenario. This resurgence was fueled by increased regional orders and a gradual reduction in inventory levels by merchants. Additionally, the rise in prices of crucial raw materials and the Euro's devaluation against the dollar played roles in shaping market dynamics.
Germany's position as a major importing hub contributed to market conditions, closely linked to exporting nations' trends. The resumption of production in exporting countries after holiday breaks and the easing of trade disruptions further supported market resilience across importing nations. Overall, the Natural rubber market in Europe experienced fluctuations driven by demand spikes, supply chain disruptions, and currency fluctuations, with Germany's market playing a pivotal role in regional dynamics.
For the Quarter Ending December 2023
North America
In the North American region, the final quarter of 2023 witnessed a positive trajectory for Natural Rubber, influenced by various factors affecting both the market and prices. The initial weeks of the fourth quarter saw an encouraging uptick in natural rubber prices, primarily driven by heightened demand from the Asian market. This surge prompted downstream businesses to raise their prices, especially in anticipation of the winter season, resulting in an increased number of domestic inquiries for natural rubber. The latest settled prices of Natural Latex Rubber (DRC 60% H.A.) CFR Houston in the USA at the quarter ending December 2023 was USD 1770/MT, with an average quarterly increase of 0.88%.
In recent months, escalating costs of crucial input materials such as energy and raw materials have further solidified the generally optimistic market outlook for this commodity. Businesses are actively replenishing their inventories through substantial order placements, contributing to the maintenance of a robust market. Although rainfall in production areas has provided some relief, the overall production of raw materials has been hampered due to limited cost support for natural rubber, fostering a cautious sentiment downstream.
Global logistical challenges, including port congestion and container shortages, have impeded the seamless transportation of natural rubber from production hubs to downstream markets. This has led to elevated transportation costs and extended delivery lead times. Ongoing geopolitical tensions have resulted in increased freight charges, compounding shipping costs. Disturbances in the Red Sea and the Suez Canal have disrupted the efficient movement of goods, contributing to additional expenses throughout the supply chain.
As a major importer, the United States plays a pivotal role in shaping market dynamics, closely reflecting the trajectory of natural rubber prices in exporting countries. Recent incidents, such as attacks on ships near the Suez Canal and persistent congestion in the Panama Canal, have added complexity to the global supply chain. Additionally, there is a shortage of containers as vessels are unable to return to Asia promptly, leading to ocean carriers canceling sailings on short notice due to ship diversions. With these crucial trade routes facing challenges, transportation and shipment become more cumbersome, exacerbating existing logistical issues and impacting the pricing of natural rubber.
Asia Pacific
In the last quarter of 2023 (October to December), the natural rubber market in the APAC region followed an upward trajectory. The primary drivers of this trend were the robust demand from end-users, especially in the tire manufacturing sector, leading to price increases. Additionally, supply-side challenges, such as periodic rainfall in key rubber-producing countries like Thailand and Vietnam, hindered raw material production, further pushing prices higher. Furthermore, the depreciation of the Chinese RMB against the US dollar increased the costs associated with importing natural rubber. These factors collectively contributed to a consistent rise in natural rubber prices throughout the quarter. In China, which experienced notable price fluctuations, the demand for natural rubber remained robust due to resilient economic growth and increased consumer spending. Tire companies actively pursued deals to replenish their stocks, intensifying the tight supply situation. On the supply side, the rubber-cutting season faced disruptions from rainfall, affecting raw material production. Inventory reduction in the Qingdao Free Trade Zone also added to the supply constraints. Despite these challenges, the Chinese market showed an improved trading outlook, with market players investing in end-use industries and expressing optimistic sentiments. However, towards the end of Q4, prices experienced a slight drop due to year-end destocking activities, aiming to make room for fresh inventories in the upcoming months. In summary, the APAC natural rubber market in the fourth quarter of 2023 witnessed an upward price trend propelled by strong demand, supply-side constraints, and currency depreciation. The price of Natural Latex Rubber (DRC 60% H.A.) FOB Shanghai at the quarter's end was USD 1330/MT, with an average quarterly increase of 5.32%.
Europe
In the last quarter of 2023, the European natural rubber market followed an upward trajectory initially but witnessed price fluctuations towards the end of Q4 due to various influencing factors. In the Netherlands, the price of natural rubber demonstrated a positive upward trend, fueled by sustained demand from the domestic sector and an optimistic market outlook. To tackle inflationary pressures, downstream enterprises adjusted their prices. The increasing costs of essential input materials like energy and raw materials also contributed to supporting favorable market conditions for natural rubber during this period. Global logistical challenges, such as port congestion and container shortages, posed obstacles to the smooth transportation of natural rubber from production hubs to downstream markets. These disruptions led to higher transportation costs and extended delivery lead times, contributing to the rise in prices. Additionally, businesses actively replenished their inventories through substantial order placements, contributing to a robust market. Downstream panel factories engaged in procurement activities with heightened bids and offers among enterprises, shaping the current market dynamics. As a major importer, the Netherlands mirrored the price trajectory of major producing and exporting market players to maintain market stability. The recent decision by the European Central Bank to keep interest rates unchanged may have a dampening effect on short-term economic activity. Concerns have also arisen regarding tensions in the Red Sea and the Suez Canal, posing a potential threat to all ships navigating through the Red Sea, regardless of their association with Israel. In response to escalating concerns, Zim has redirected its ships from the Suez to the longer Cape of Good Hope. With the termination of Q4, this shift in pricing dynamics has implications for both market experts and traders who strategically built up excipient stocks in anticipation of an expected surge in demand from their respective end-user sectors. This proactive stockpiling prompted domestic players to destock their existing inventory to make room for fresh inventories in the upcoming months. The price of Natural Latex Rubber (DRC 60% H.A.) CFR Rotterdam at the quarter's end was USD 1170/MT, with an average quarterly increase of 2.16%.
For the Quarter Ending September 2023
North America
In the third quarter of 2023, there was a consistent fluctuation in North American natural rubber prices. These prices began at $1345 per metric ton in July but declined to $1140 per metric ton in September, resulting in an average quarterly decrease of 5.77%. This drop in prices was primarily caused by sufficient inventories and a subdued demand outlook from downstream industries, which is part of a broader trend observed in major exporting countries. The complex dynamics of the global market, which include disruptions in the supply chain and regional purchasing trends, played a significant role in shaping this important development. The successful meeting of the demand for natural rubber had a cascading effect, leading to decreased demand and subsequent oversupply, which in turn pushed prices down. The September price decrease of natural rubber in the USA reflects the dynamics seen in major exporting countries. On the supply side, countries that are major rubber exporters, like Thailand and Malaysia, have experienced an abundance of natural rubber stocks, contributing to a weak market situation.
Asia Pacific
Throughout the third quarter of 2023, natural rubber prices in the Asia-Pacific (APAC) region consistently experienced a decline. The cost of Natural Latex Rubber (DRC 60% H.A.) FOB Bangkok (Thailand) was evaluated at $1,150 per metric ton in July but dropped to the same value in September, indicating an average quarterly decrease of 2.37%. In July, the increase in supply pressure, driven by high inventory, combined with relatively weak downstream demand due to hot weather, contributed to the downward trend in natural rubber prices. In terms of inventory, the stock of natural rubber continued to rise, surpassing the rate at which it was being sold. Concerning downstream demand, tire companies had a relatively high operating rate, but they still couldn't sufficiently counterbalance the high supply pressure. In mid-August, prices exhibited some fluctuations and a slight increase, partly due to the impact of two typhoons. As for new rubber production, it continued to grow during the peak season, albeit at a somewhat reduced rate due to recent rainfall in Southeast Asia and the ongoing decline in latex prices in major rubber-producing countries. By September, prices saw a significant depreciation as a result of a substantial accumulation of domestic spot rubber inventory, compounded by the fact that it was still the off-season for car sales.
Europe
During the third quarter of 2023, the European natural rubber market experienced significant price fluctuations. Natural rubber prices within the European region showed consistent volatility during this period. The prices began at $1245 per metric ton in July but declined to $1100 per metric ton for Natural Latex Rubber (DRC 60% H.A.) CFR Rotterdam (Netherlands) by September, resulting in an average quarterly decrease of 4.58%. The price drop in July was particularly remarkable and had negative impacts on consumption in the food and industrial sectors. This situation was exacerbated by a recent inflation spike. At the downstream, all segmented markets saw adverse changes, with the global economic downturn and increased costs due to inflation leading to decreased demand. According to data, retail sales of narrow passenger cars in July are anticipated to be 1.73 million units, marking an 8.6% decrease on a monthly basis and a 4.8% decrease on a yearly basis. Furthermore, reduced raw material expenses have made the production of natural rubber more cost-effective, and these cost savings are being passed on to consumers. In response to oversupply, market dynamics prompted price reductions to clear existing stocks and create space for new inventory. Additionally, due to declining prices in competitive countries, there was a stronger incentive for the domestic market to lower its prices in order to maintain competitiveness.
For the Quarter Ending June 2023
North America
In the second quarter of 2023, North American natural rubber prices experienced a consistent pattern of fluctuations. These prices commenced at $1540 per metric ton in April, but by June, they had decreased to $1370 per metric ton, resulting in an average quarterly decline of 1.68%. The fluctuating dynamics of supply and demand for natural rubber during June had a significant impact on the drop in natural rubber prices in the U.S. market. Due to notably low demand from both domestic and international industries, domestic suppliers found themselves with a surplus of natural rubber in their warehouses, leading to a continuous reduction in prices within the local market. To reduce their existing stock and make room for fresh supplies, these suppliers lowered their price quotations. Additionally, as natural rubber prices in Southeast Asia, particularly in major importing countries like Vietnam and Thailand, had fallen, a similar trend was observed in the domestic market of the United States.
Asia Pacific
During the second quarter of 2023, natural rubber prices in the Asia-Pacific (APAC) region followed a volatile path. The cost of Natural Latex Rubber (DRC 60% H.A.) FOB Bangkok (Thailand) was initially $1300 per metric ton in April, but by June, it had fallen to $1240 per metric ton, representing an average quarterly decline of 1.00%. During the first two months of the second quarter, prices were relatively high due to challenges affecting rubber plantations in Thailand and Malaysia, such as leaf disease, as well as issues in Yunnan Province, China, where powdery mildew affected rubber plantations. Additionally, the possible occurrence of the 'El Niño phenomenon' in that year was expected to result in reduced rainfall, causing dry and hot conditions that would hinder rubber harvesting and lead to decreased production in many areas. However, as June began, prices saw a significant drop due to sluggish sales and reduced demand both domestically and internationally. Furthermore, the domestic suppliers had ample inventories to meet the demand, contributing to a weak market situation.
Europe
In the second quarter of 2023, the European natural rubber market underwent significant price fluctuations. Prices for natural rubber in Europe exhibited consistent volatility during this period. They initially started at $1350 per metric ton in April but fell to $1270 per metric ton for Natural Latex Rubber (DRC 60% H.A.) CFR Rotterdam (Netherlands) by June, resulting in an average quarterly decrease of 4.24%. The drop in prices in April was attributed to the significant accumulation of spot stocks in the natural rubber market, and although the operating rate of downstream product manufacturers occasionally increased, it lacked strong sustainability. The transaction volume in the automotive/passenger vehicle market decreased, leading to a generally bearish sentiment in the market. Additionally, the increased yield of raw materials used in natural rubber production, such as rubber trees in recent months, contributed to the market's weakness and the subsequent price decline. Furthermore, low prices for natural rubber in major producing and exporting countries also had an impact on the market trajectory in importing countries.
