After fluctuating at historically low levels throughout 2015 and in the first quarter of 2016, from the second quarter of last year the prices of natural rubber started a substantially rising trend, from 130 Us$c/kg in March 2016 to 220 Us$c/kg in February 2017. This is ascribable to the surge in the input request for the tyre industry, in emerging and advanced economies alike, but that is not all: the lively global demand has in fact been complemented by critical elements at the supply side, with production in Thailand (the most important global exporter) declining because of the severe floods characterising the first weeks of 2017: on the whole, the overall picture of the fundamentals therefore seemed to suggest the continuation of the rising trend in the remaining part of the year.
However, this was not the case. To the surprise of market operators, not only did the global supply in the first quarter of the year yield ground, but it even managed to come up with a moderate increase. Specifically, the decidedly better contribution of the expectations of Indian production ultimately made up for the retreat of the Thai production, bringing about a swift easing of tensions. From that moment onwards, the sudden change in expectations resulted in a distinct drop in prices to below 140 Us$c/kg in the light of the latest daily revelations of the month (with an overall loss equal to almost 40% between February and June).
Besides, the cuts to export decided by the association of the principal member states (ARNPC) in a meeting held at the end of April to stabilise prices (a measure that already in the past did not prove especially successful) do not appear to have any effect, and also thanks to the contextual slowdown of international demand (particularly China) in the remaining part of the year, it is unlikely that prices may undergo any further accelerations. It is likely that enterprises of the rubber sector may therefore face an overview of supply costs essentially lacking complications.