Global Business Outlook Remains Healthy for Rubber

Rubber markets in domestic and global trade centres have been trading with an upward bias in last few weeks. There is limited inventory in the Indian markets which keeps the prices firm. Positive global cues also support the domestic markets presently. Rubber consumption had fallen significantly in 2020, driven by demand destruction against spreading of the pandemic. Reports indicate that the natural rubber production is declining despite an increase in mature areas.  

Global Demand-Supply Situation: 

The global supply of rubber gloves is anticipated to hit 420 billion pieces this year, about 80 billion pieces short of the projected demand of 500 billion pieces as the world continues the combat the global corona virus pandemic. This data was provided in a recent virtual briefing by the MARGMA (the Malaysian Rubber Glove Manufacturers Association). The Association added that the requirement for these gloves rose first in early 2020, when global demand first expanded due to the urgent need for Personal Protective Equipment (PPE) to control spreading of the virus. That time there was a shortage of 100 billion pieces of rubber gloves, with demand hitting 460 billion pieces but supply was not more than 360 billion pieces. Interestingly the shortfall was 40 billion pieces, even a year ago i.e. the pre pandemic year when global demand was at 340 billion pieces.  

Taking in consideration the new habits, health awareness and awareness of hygiene in context to the corona virus pandemic; increased glove usage in industries such as the F&B industry and aviation industries, it is quite likely that demand for this product will be robust, therefore the global rubber glove shortage will continue for next one or two years as well. India’s automobile industry, which is currently the fourth largest in the world, is expected to become the third largest in next few years, as predicted by leading rating agencies. 

Global natural rubber consumption may increase by 7% in 2021, as per the International Rubber Study Group (IRSG). However, demand recovery this year could be slower than expected, despite growth in Asia. The IRSG has projected a 5.3% rise in global natural rubber consumption in 2022. In context to the demand outlook for 2021-2022, natural rubber demand is forecast to increase by 7%, while synthetic rubber demand is forecast to increase by 7.2%. For year 2020-2021, the Association of Natural Rubber Producing Countries (ANRPC) had pegged global production of natural rubber at 13.13 million tonnes, and demand at 12.904 million tonnes.  

Rubber Futures Market Outlook: 

According to the International Rubber Study Group (IRSG), production of natural rubber production will increase this year by 5% with declines in Southeast Asia’s production, and increase in the other producing areas. In near future, plantations may be adversely affected in case of heavy rains, dryer weather and higher temperatures.

MCX June Rubber futures are expected to trade with an upward bias in coming weeks and prices may not sustain below 16700-16800 levels. Possibility of prices to move as high as Rs.18250-18500 can be observed by next month. Currently prices in markets of Kerala are averaging near Rs.17500/qtl.