Rubber Markets Maintain Upward Trend – Demand Outlook Appears Promising

Rubber Markets in Upward Trend: It has been over a month since the domestic rubber markets have trended upwards. The August contract of MCX rubber has appreciated by nearly 700 rupees as compared with the prices, one month back. Because of the ongoing pandemic threats, import deals are getting negatively impacted which keeps the market supported.

The markets are in an upward trend also because of tight supplies, resulting from industrial demand from such as automobiles and healthcare industry. The rainfall activity has disrupted the supplies largely, resulting in firming prices. Already the supplies are limited these days as it is the off season period for rubber. It will take at least one or two months before the new season supplies start arriving.

Increasing consumption for rubber gloves and packaging tapes during Covid-19 pandemic has resulted in tightening of natural rubber supply thereby supporting the Indian as well as world markets. The global rubber supply is already running short due to stockpiling by China, while US auto manufacturers are rushing to secure shipments before the market gets squeezed further. According to the data provided by the MARGMA (the Malaysian Rubber Glove Manufacturers Association), few months back, world’s rubber glove supply 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 coronavirus pandemic.

Demand Outlook Remains Optimistic: 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 is currently the fourth largest in the world, and as predicted by the leading rating agencies the industry may become the third largest in the next few years. 

As the world recovers from the pandemic, rubber consumption is likely to grow further. The impact will be visible in the price levels in this situation. On the whole, the demand outlook remains bright for Indian rubber in coming months. As understood from the medium term charts, we expect the September contract of rubber to trade with an upward bias next month, as long closes comfortably above the 16000 level. Possibility of gains towards 20000-20500 levels has increased, for the given period.