Dear Sir/Madam,

The Association of Natural Rubber Producing Countries hereby releases the most updated picture of emerging developments in supply, demand and market trends in world rubber market, through the monthly bulletin "Natural Rubber Trends & Statistics" for April 2017.

In a marked improvement from earlier issues of Natural Rubber Trends & Statistics, from this issue onwards we are providing a separate section giving an overview of world supply and demand.  This is to enable the users to get a holistic view of supply and demand, including those of non-ANRPC countries. The new section also attempts to provide a closer picture of emerging world supply, demand and supply-demand balance for all months of the year.  Besides, we have also attempted to improve the depth of analysis so that users can have a better understanding of developments in commodity markets in general and natural rubber market in particular.  

Sentiments in natural rubber market during the past couple of years have been dominated by reports indicating oversupply resulting from large-scale planting undertaken from 2010 onwards. In this context, ANRPC has made a scientific assessment of the area to be newly opened for tapping during all the years from now. Along with this, we have accounted the acreage of trees cut down for replanting and also the acreage discarded or perished. Likely changes in average yield per hectare were also considered by accounting all relevant factors across countries. Based on the assessment, world supply of natural rubber, including supply from non-ANRPC countries, is anticipated to remain short of demand during all months up to December 2017. The shortfall is expected to progressively widen from April 2017 onwards to reach 688,000 tonnes in June 2017 before narrows down in subsequent months to reach 46,000 tonnes by December 2017.  

World supply during January to April 2017 was short of demand by 466,000 tonnes, according to preliminary estimates.  Despite a deficit supply, natural rubber prices have moved along a falling trajectory from February 2017 onwards largely due to factors external to the sector. Crude oil prices sharply fallen from February 2017 due to rising US shale gas output and reported failure in the effective implementation of the production curtailment programme agreed among OPEC members and major non-OPEC oil producing countries.  Low crude oil prices keep sentiments down at Shanghai rubber futures and physical markets often follow suit. 

Strikingly, the current phase of low rubber prices is largely a manifestation of a downtrend prevailing in all commodities rather than a phenomenon specific to rubber. Sentiments in commodity markets are affected by US Federal’s indication of a further upward revision of policy interest rates which expected in June 2017. This has reportedly made US bonds more attractive to speculative investors and prompted them to shift from Asian commodities. Due to financialization of commodity markets and greater influence of speculative funds in determining commodity market trends, prices need not always reflect the conditions prevailing in supply and demand. 

OPEC members and non-OPEC oil producing countries are expected to reach an agreement for an extension of the production curtailment programme on expiry of the existing production cut which is scheduled to end in June 2017.  Although crude oil prices have fallen by 17% from February through May, they are anticipated to recover.  Brent crude oil currently rules at around US$ 46 per barrel (US$ 46.61 on May 8).  According to US Energy Information Administration, Brent crude oil is expected to recover and average at US$ 50.9 per barrel in the quarter ending June 2017, US$ 52.0 per barrel in the quarter ending September 2017 and US$ 54.0 per barrel in the last quarter of the year. World Bank anticipates Brent crude oil to average at US$ 55 per barrel in 2017 and US$ 60 per barrel in 2018. The anticipated recovery in crude oil market is expected to fuel sentiments in natural market during rest of the year.

The International Monetary Fund anticipates 18% rise in prices of “All Commodities” during 2017 as compared to 2016. Natural rubber market usually gains in tandem with uptrend in all commodities. However, prevailing strong US dollar is an impediment to marked recovery in natural rubber market. As the Federal Reserve plans to raise policy interest rates step by step, US dollar is likely to stay strong unless the US initiate a policy to weaken dollar in an effort to boost the exports. 

I request all users to offer your valuable views on this improved version of the publication and suggest modifications.  ANRPC extends its gratitude to statistical correspondents in member governments and resource persons in non-ANRPC countries for the updated information provided.

Thank you.

Dr. Nguyen Ngoc Bich
Secretary-General