Rubber Business May Register Sharp Growth in Global & Indian Markets This Year

Global rubber markets have been trending upwards since last 3-4 months. Indian rubber futures at MCX have appreciated by more than 1000 Rs/qtl in this period. As the world recovers from pandemic, demand for rubber is likely to grow further. The impact is often seen on the price levels therefore.

Cambodian natural rubber (NR) latex prices on international markets have risen by more than 10 percent year-on-year, driven by rising demand from China, and also from few regions of India. Based on reports, China’s economy has resumed its growth trajectory in recent months and resulted in demand surge for NR from Cambodia and there is news of increased shipments of the commodity from this nation.Increase in labour shortages in neighboring rubber-growing countries has also caused rise in Natural Rubber exports from Cambodia. 

As the industrial demand is likely to improve, it will result in better consumption of rubber. In context to the latest outlook by the inter-governmental organization of 13 rubber producing countries, India’s rubber consumption outlook for 2020 has been revised upwards to 10.18 lakh tonne with the automotive sector on a recovery mode.The overall demand-supply fundamentals of rubber indicate greater possibility of average prices to remain above last year’s in forthcoming months.

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 piecesas the world continues the combat the global coronavirus 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 spreadingof 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 coronavirus 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.

Tyre manufacturing demand is therefore expected to rise further. With the Kerala government’s hike in the support price to Rs.17000 per quintal from Rs. 15000 in the State Budget for 2021-22, the industry persons now feel that this decision will be helpful in promoting rubber growers who were reeling under high production costs.

As per market views, this announcement may keep average price levels of rubber above 17000 in upcoming months. All in all, the global as well as domestic rubber business potential has increased significantly for this year.