The Association of Natural Rubber Producing Countries forecasts that it will be difficult for rubber prices to recover in the short term, and the global rubber commerce in 2020 might increase by only 1.2% compared to that in 2019.
The Department of Import and Export (of the Ministry of Industry and Trade) said that in the first 10 days of April 2020, the rubber price at the main markets remained at a low level despite an increase.
The reason for the alarmingly low global price of rubber is the fact that the concerns regarding COVID-19 are reducing the global rubber demands. The rubber price will likely remain low due to the effects of COVID-19 causing car manufacturing factories worldwide to cease operation, reducing the demands for tires, while making the crude oil price plummet.
Automobile brands in North America and Europe have all had to paused production due to the epidemic. Toyota Motor has temporarily stopped the operations in its factories in Europe, except for those in Russia, while waiting for further announcements.
Renault has also postponed its operation, except for that of factories in China and Korea. The temporal operation delay of automobile factories results in the same action of tire factories.
Even though Chinese production is recovering, its export will still be limited due to the decrease in demands from foreign countries due to COVID-19, which will also result in a drop in domestic demands.
Therefore, the Chinese rubber commodity production, especially the automatic tire production, will take some time to return to their usual performance. The aforementioned may lead to negative impacts on the demands for Chinese natural rubber.
ANRPC warns that the global rubber demands might fall by 8.2% in April 2020 due to the impacts of COVID-19, and that forecast has not included the downward demand adjustment in India, as well as the decrease in export in Thailand, Malaysia, and Indonesia as these countries are facing the emergency and the quarantine regulations.
In the most recent report, ANRPC forecasts that the 2020 natural rubber production will reach 14.11 million tons, increasing by 2.2% compared to that in 2019. According to this expectation, the production growth rate has been adjusted downward by 0.5% compared to the forecast made in March 2020.
The decline in production is mainly due to the falling rubber prices and the government's travel control and closure orders, as well as the reduced demand, which forced factories to reduce capacity to 13.82 million tons.
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Source: https://cafef.vn/
