According to Nikkei Asia, international natural rubber prices have hit their lowest level in more than two months, as concerns about reduced supply have eased along with uncertainty about Chinese demand.
On the Osaka Exchange, the RSS3 rubber futures contract (the most actively traded contract) last weekend reached 310.1 yen (2.11 USD)/kg. This is the lowest price since mid-May.
In major rubber exporting countries, including Thailand and Vietnam, April and May are considered difficult production months. However, the difficult period lasted longer this year when the rainy season was delayed due to the El Nino effect, pushing rubber prices to a rare high in June.
But supply concerns have eased as the difficult period ends.
Tires account for more than 70% of natural rubber demand and China is the world's largest auto market.
In China, however, "demand for natural rubber has weakened due to declining auto sales, especially electric vehicles," said Mr. Gu Jiong of Yutaka Trusty Securities.
According to the Import-Export Department (Ministry of Industry and Trade of Vietnam), the Asian rubber market is under pressure because China's economic data is lower than expected. China is the world's largest auto market. This country is a global leader in the development of new energy vehicles, including battery-powered cars and hybrid vehicles (gasoline-electric vehicles).
In the first 6 months of 2024, China is still Vietnam's largest rubber export market, but the amount of rubber exported to this market decreased compared to the same period in 2023. According to statistics from the General Department of Vietnam Customs In the first 6 months of 2024, Vietnam exported 489.37 thousand tons of rubber to China, worth 717.9 million USD, down 16% in volume and 8% in value compared to the same period in 2023. Rubber exports to China account for 67.35% in volume and 64.8% in value of the country's total rubber exports in the first 6 months of 2024.
This agency believes that in the coming time, the Chinese market's demand for rubber may be affected because the EU has imposed a 37.6% tax on electric vehicles imported from this country since July 5, 2024.
Experts predict that temporarily higher taxes will reduce China's electric vehicle imports by 42% and electric vehicle prices may increase by an average of 0.3-0.9% in the EU. If China's electric vehicle exports are affected, China's demand for imported rubber to produce tires will also decrease accordingly.
In addition to falling demand from China, the yen's recent appreciation has also contributed to a decline in the price of rubber futures priced in the currency. However, the dominant view in the market is that rubber prices will remain high in the near future.
