Global rubber supply tightened in October, but consumption was expected to improve

1: Frequent weather disturbances are expected to have limited annual output growth

As of October 2024, global NR production increased by 2.9% year-on-year to 11.286 billion tons. In October, oil production was 1.366 billion tons, down 1.6% from the previous month. Despite supply disruptions caused by typhoon in China, affecting 16000 hectares of rubber trees, and continued rainfall in parts of Thailand, annual net output in 2024 is estimated to be 14.528 million tons. Corrections to increases in Cote d'Ivoire's 2024 production (1.8 million tons) and average planting prices support a modest 4.5% increase in production in 2024. However, annual growth in a few countries reflects deviations from global supply trends.

Volatility in the first quarter of 2024, followed by heavy rains and floods in the third quarter, has severely affected the frequency of rubber tree felling and overall latex production, especially in Thailand and Vietnam. Declines in NR production can often be attributed to multiple factors: farmers 'preference for growing more profitable crops has continued for many years due to low rubber prices; unstable weather has slowed rubber mining activity and consequent reductions in supply; and continuing concerns about compliance with the European Union No Deforestation Regulation (EUDR). Production in Cambodia, Indonesia and Malaysia is expected to increase slightly in October from the previous month, with the increase in NR production due in part to higher planting prices that occurred during the peak production season.

2: Improving demand in China has provided support for global demand

Combined with preliminary estimates as of October provided by ANRPC members, the global natural rubber (NR) demand outlook has been slightly revised, resulting in a slight decline to 15.136 million tons. This is a decrease of 0.2% compared with 15.173 million tons in 2023. This revision is mainly due to the revision of China's annual demand to 7.216 million tons, and Malaysia's annual demand to 265 million tons.

During this period, global total NR demand fell slightly by 4.5% year-on-year, with a total of 121.07 million tons. Member states of the Association of Natural Rubber Producing Countries (ANRPC) continue to significantly influence market dynamics as important producers and consumers. It is worth noting that major consumers in China and India experienced moderate growth in demand during this period. Instead, many countries, including ANRPC member states such as Thailand, Indonesia, Malaysia and Vietnam.

3: Short-term market influencing factors

1. As the EU imposes a high tariff of 45% on China's electric vehicles, it may cause the China market to shift to the Southeast Asian market.

2. In the short term, the market may be affected by the decision of the European Parliament to postpone the implementation of the EU Deforestation Free Regulation (EUDR) for 12 months until December 2025.

3. Continuing geopolitical conflicts and tensions may lead to an increase in NR prices in the short term.

4. During this monsoon season, unfavorable weather conditions may lead to tightening of natural rubber supplies in the coming months, even though this period is a traditional peak production period. Looking forward to November, global production is expected to increase by 3.2% to a total of 1.41 million tons.

Note: Global natural rubber consumption data statistics are based on the latest data and are for reference only.