Although the consumption of rubber glove manufacturers continues to rise, the demand from automakers, the traditionally largest customer base, is still declining. At the same time, China’s economic restart has increased some optimism, but concerns remain in other parts of the world, including the United States.
It is understood that in the futures market, the price of rubber fell by 27% in the * quarter, the worst performance since 2008, and has since risen by 14%. However, the spot market has not changed much because tire factories do not have enough demand. Prices cannot rise again because there is no demand. Many rubber factories, including those that supply large tire manufacturers Goodyear and Bridgestone, are unable to sell spot goods and are forced to deliver to the futures market as an alternative.
Due to the uncertain prospects, major rubber producing countries (Thailand, Indonesia, Malaysia) are implementing different countermeasures. Thailand chooses to use rubber as a raw material for roads and guide posts to increase domestic consumption; Indonesia believes that China's demand has helped, but total exports are still declining, and no recovery will be seen before the end of the year; Malaysia is betting that rubber gloves are its savior.
The following are the views of the major rubber-producing countries on the rubber market:
1. Kajohnjak Nuanphromsakul, Acting Director of Thailand-Thailand Rubber Administration
Automobile tire exports have fallen, but latex prices have rushed to the top of the film. The outbreak of the epidemic has increased the demand for concentrated latex for the production of medical devices, such as rubber gloves. Thailand is expected to export 3.7 million tons of rubber this year, down 5% from 2019. Although the leaf disease that damaged plantations last year has been reduced this year, there are still four provinces that will reduce the supply.
2. Thailand-Thailand Rubber Group CEO Pattarapol Wongsasuthikul
Globally, the supply into the market has dropped by about 10% in the past 6 months, due to the extreme weather in the rubber-producing countries. The drought in Thailand in March and April has reduced the output of glue during rubber tapping.
3.Zairossani Mohd Nor, Director of Malaysia-Malaysian Rubber Bureau
The Malaysian rubber industry is expected to grow by 6.5% compared to 2019 to reach 33 billion ringgits (approximately US$7.7 billion).
The export of rubber gloves this year plans to climb 15% to 20 billion ringgit. It plans to export 225 billion rubber gloves globally to increase its share of the global market from 62% to 65%.
The export of natural rubber decreased by 10% due to the deceleration in demand, especially the decrease in demand from China in the first five months of 2020.
The government is providing incentives to small growers to encourage rubber tapping, subsidizing costs, including making up the price difference when the price drops to a certain level, and cash subsidies during the monsoon season.
4. Moenardji Soedargo, President of Indonesia-Indonesia Rubber Association
The shipment is delayed or cancelled, and there is no business dealings. If there is a recovery in the fourth quarter, it will be very prominent.
Although the demand for rubber gloves is growing, the design of the Indonesian rubber industry does not have the capacity to supply this sector.
Malaysia has obtained a business opportunity from this epidemic, but for us, changing the industrial design is not something we can accomplish in one or two years.
Rubber farmers are delaying rubber tapping because of low prices and low demand.
Source: China Rubber Information Trade Network