Why is the global rubber market likely to see shortages in 2025?
Natural rubber production is expected to be below demand for the fifth year in a row in 2025. According to the Association of Natural Rubber Producing Countries (ANRPC), global natural rubber production is likely to rise 0.3% in 2025. However, worldwide demand is expected to far outstrip this number, at an estimated 1.8%.
Rubber is used widely in a number of products such as automotive parts, industrial goods, footwear, conveyor belts, medical equipment and flooring, among several others. The material is prized primarily for its durability, elasticity, water resistance and low maintenance.
The global rubber market is expected to hit around $65.7 billion (€60.3bn) by 2030, according to a Grand View Research report.
Two kinds of rubber are mainly traded in global markets. These are synthetic rubber, which is made from natural gas and petrochemical sources, and natural rubber, which is derived from tropical trees.
Some of the top natural rubber producing countries include Thailand, Indonesia, Vietnam and Malaysia. Other countries such as China, India, the Ivory Coast, Sri Lanka, Cameroon and the Philippines are also major producers.
Rubber futures dropped around 4% this week, trading at 195 US cents per kilogram on Friday morning, having also fallen 4.8% on a monthly basis. This was the lowest since mid-February, as traders balanced supply concerns with the effects of continuing trade tariffs.
One of the major reasons for the expected gap between natural rubber production supply and demand in 2025 is because of lagging output in several key countries such as Vietnam and Indonesia for several years now.
This has mainly been caused by consistent adverse and extreme weather in recent years. That was the case in Thailand, which was hit by a heatwave at the beginning of last year, meaning that the low production season that rubber crops usually see between February and May was extended. Very hot weather also causes stunted growth in rubber trees.
In Thailand, significant flooding and very heavy rainfall followed the heatwave in early 2024, which then also curbed peak season rubber output. These frequent extreme weather events can significantly decrease overall latex production.
China, which is the fifth-largest rubber producer worldwide, has faced the same issue with adverse weather. Typhoons and heavy rains have significantly damaged vital rubber producing areas such as Cheng Mai and Lin Gao, on Hainan Island.
According to the European Forest Institute, Thailand's overall rubber cultivation area fell by 4.5% between 2017 and 2022. This was mainly because of hotter weather, limited land availability, natural disasters, rising labour costs and the widespread impact of leaf flow disease, which can reduce tree productivity.
A shift towards more profitable crops like palm trees, which can then be used for palm oil, has also impacted rubber production in several Southeast Asian countries. In several cases, low rubber production, mainly caused by the death of several rubber trees, may push farmers towards other crops.
Other challenges such as deforestation and labour exploitation, as well as price volatility and competition from synthetic rubber, continue to plague the global natural rubber industry.
Agroforestry, which is the process of planting trees and crops on the same land, can substantially boost rubber production. This is mainly by enhancing soil health, which in turn, leads to healthier and more productive rubber trees. Plants like bamboo, coffee or tea can be planted alongside rubber trees, along with fruit or timber trees.
This practice can also help crops to be more resilient to extreme weather and climate change. In turn, this helps to protect farmers' revenues, diversifying income streams by reducing dependence on a single crop. If farmers feel more financially secure, they are then more likely to continue producing some rubber, instead of switching to more profitable crops.
Agroforestry also helps to increase land productivity and reduce dependence on chemical pesticides and fertilisers, as it enhances nutrient cycling and natural pest control. On top of this, the practice boosts the lifespan of rubber trees.
The Global Platform for Sustainable Natural Rubber (GPSNR), an industry body aiming to help develop a more sustainable rubber supply chain, recently revealed that it would provide funding to train 1,000 Thai farmers in agroforestry by 2025.
Germany's conservative leader Friedrich Merz, set to become the next chancellor, sealed a landmark deal on Friday with the Greens and Social Democrats to ease Germany's strict borrowing limits, unlocking an unprecedented €500-billion spending spree that could redefine the country's economic future.
Markets have responded swiftly, sending the euro higher and German equities surging as investors bet on an economic boost from increased defence and infrastructure spending.
The new agreement will exempt defence spending beyond 1% of GDP from Germany's strict constitutional debt brake and create a €500bn fund for infrastructure investment. It also includes €100bn earmarked for climate and economic transformation projects.
"Germany is back," said Merz, announcing the deal.
'It is a clear message to our partners and friends, but also to our opponents, to the enemies of our freedom: we are capable of defending ourselves and we are now fully prepared to defend ourselves,' he added.
Merz expects the necessary constitutional amendments to be voted on as early as Tuesday. With a two-thirds majority needed to approve the changes, negotiations with the Greens proved crucial in securing support.
Markets have embraced the shift in Germany's fiscal stance. The euro climbed 0.3% to 1.0890, heading for a second straight week of gains, while the yield on Germany's 10-year Bund rose six basis points to 2.90%.
The DAX index jumped 1.5%, with defence and industrial stocks leading gains.
Rheinmetall soared 8.76%, HeidelbergCement gained 5.19%, and Siemens Energy rose 3.18%. Financials also rallied, with Commerzbank up 3.54%.
Broader European markets followed suit, with the Euro STOXX 50 rising 1%, Italy's FTSE MIB up 1.8%, and France's CAC 40 climbing 1.2%.
The banking sector was another standout performer, with Erste Bank up 4.88%, Deutsche Bank gaining 3.59%, and BNP Paribas rising 3.47%.
'Markets are clearly viewing the change in Germany's fiscal stance as comparable to the decision to jointly issue debt in response to the pandemic,' said Bank of America analyst Adarsh Sinha.
Goldman Sachs has significantly revised its German growth forecasts, now predicting GDP will rise by 0.2 percentage points to 0.2% in 2025, by 0.5 points to 1.5% in 2026, and by 0.6 points to 2% in 2027. The investment bank also sees a broader spillover effect across Europe, lifting eurozone GDP growth projections to 0.8% in 2025, 1.3% in 2026, and 1.6% in 2027.
'The fiscal news lowers the pressure for the ECB to reduce rates below neutral. We therefore no longer expect the Governing Council to cut at the July meeting and raise our forecast for the terminal rate to 2% in June,' said Goldman Sachs economist Sven Jari Stehn.
While Germany's fiscal expansion has been welcomed by investors, some policymakers are concerned about its inflationary impact.
European Central Bank (ECB) Governing Council member Robert Holzmann, one of the most hawkish voices in Frankfurt, said higher government spending could force the ECB to reverse course on rate cuts and even start raising rates again.
'We don't yet know what will happen. However, if that happens, the direction for interest rates points toward neutral to rising, rather than neutral to falling,' Holzmann told Germany's Platow Brief.
The German fiscal expansion marks a turning point not only for Berlin but for the entire eurozone.
Sir Alex Younger, former chief of Britain's Secret Intelligence Service, highlighted the significance of the shift.
'Germany's recent decision to throw away the fiscal orthodoxy of the last three decades and sharply increase defence and infrastructure spending was a step in this direction; Europe doesn't change unless Germany does, so this is huge,' Younger said in an interview with Goldman Sachs.
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Euronews
7 hours ago
- Euronews
Ukraine: Kharkiv hit by massive Russian aerial attack
The US administration has appointed Lt. Gen. Alexus G. Grynkewich as both the next top US general in Europe as well as the SACEUR. The appointment by Trump will be especially welcomed following media reports in recent months that the US was considering relinquishing the role of SACUER which has always been appointed by a US president to NATO. "It's a very important decision and there is relief from NATO's point of view as it's a positive sign of American engagement and staffing," a US-based source familiar with the issue told Euronews. US Army General Dwight D. Eisenhower was NATO's first SACEUR in 1951, and the role has remained with the US ever since. 'Upon completion of national confirmation processes, Grynkewich will take up his appointment as the successor to General Christopher G. Cavoli, United States Army, at a change of command ceremony at the Supreme Headquarters Allied Powers Europe in Mons, Belgium, expected in the summer of 2025,' a statement from NATO read. Meanwhile, NATO defence ministers agreed to a significant surge in defence capability targets for each country, as well as moving to spending 5% of GDP on defence. They've agreed that 3.5% of GDP would be used for 'core defence spending' - such as heavy weapons, tanks, air defence. Meanwhile 1.5% of GDP per year will be spent on defence- and security-related areas such as infrastructure, surveillance, and cyber. However, the full list of flexibility has not yet been negotiated. 'These targets describe exactly what capabilities Allies need to invest in over the coming years,' NATO Secretary General Mark Rutte told journalists. The US has been pushing NATO allies to dramatically increase spending, and expects to see 'credible progress' immediately, according to US Ambassador to NATO Mathew Whitaker. 'The threats facing NATO are growing and our adversaries are certainly not waiting for us to re-arm or be ready for them to make the first move," 'We would prefer our Allies move out urgently on reaching the 5%,' he told journalists in a briefing on the margins of the meetings. Ambassador Whitaker also said the US is 'counting on Europe' to the lead in providing Ukraine with the 'resources necessary to reach a durable peace' on the continent. Mark Rutte reiterated NATO's recent warnings that Russia could strike NATO territory within the next couple of years. 'If we don't act now, the next three years, we are fine, but we have to start now, because otherwise, from three, four or five years from now, we are really under threat," he said, adding: "I really mean this. Then you have to get your Russian language course out, or go to New Zealand.' 'It's good to have continuity about the US in NATO, but with Ukraine it's a different story. I just don't think Trump really cares about Ukraine," the US-based source told Euronews. 'Trump just doesn't care about Europe – it doesn't make him richer or help him politically,' the source said. Referring to the forthcoming NATO summit taking place next month in The Hague, the source said the presence of Ukraine at the summit "will likely be scaled back", since the US will say, "they're not members' so they don't need to be there". A large Russian attack with drones and missiles has hit Ukraine's eastern city of Kharkiv on Saturday, killing at least three people and injuring 21, local officials said. The barrage — the latest in near daily widescale attacks — included aerial glide bombs that have become part of a fierce Russian onslaught in the three-year-war . The intensity of the Russian attacks on Ukraine over the past weeks has further dampened hopes that the warring sides could reach a peace deal anytime soon — especially after Kyiv recently embarrassed the Kremlin with a surprise drone attack on military air bases deep inside Russia. According to Ukraine's Air Force, Russia struck with 215 missiles and drones overnight, and Ukrainian air defenses shot down and neutralised 87 drones and seven missiles. Several other areas in Ukraine were also hit, including the regions of Donetsk, Dnipropetrovsk, Odesa, and the city of Ternopil, Ukrainian Foreign Minister Andrii Sybiha said in a post on X. 'To put an end to Russia's killing and destruction, more pressure on Moscow is required, as are more steps to strengthen Ukraine,' he said. Kharkiv's mayor Ihor Terekhov said the attack also damaged 18 apartment buildings and 13 private homes. Terekhov said it was 'the most powerful attack' on the city since the full-scale invasion in 2022. Kharkiv's regional governor Oleh Syniehubov said two districts in the city were struck with three missiles, five aerial glide bombs and 48 drones. Among the injured were two children, a month and a half year old baby boy and a 14-year old girl, he added. The attack on Kharkiv comes one day after Russia launched one of the fiercest missile and drone barrages on Ukraine, striking six Ukrainian territories and killing at least killing at least six people and injuring about 80. Among the dead were three emergency responders in Kyiv, one person in Lutsk and two people in Chernihiv. Meanwhile, the Ukrainian Air Force said it shot down a Russian Su-35 fighter jet on the Kursk front inside Russia, the Ukrainian daily Ukrainskaia Pravda reported. No more details were given immediately. U.S. President Donald Trump said this week that his Russian counterpart, Vladimir Putin, told him Moscow would respond to Ukraine's attack on Russian military airfields last Sunday with "Operation Spiderweb" In a new statement bound to cause offense in Kyiv and amongst its allies, Trump told journalists on board Air Force One on Friday evening local time when asked about "Operation Spiderweb": "They gave Putin a reason to go in and bomb the hell out of them last night. That's the thing I didn't like about it. When I saw it I said 'Here we go, now it's going to be a strike'." The European Union is readying a new round of sanctions against Russia to pile extra pressure on the Kremlin and pressure it to agree to a 30-day unconditional ceasefire in Ukraine, a step that Western allies consider indispensable for serious peace negotiations. Ursula von der Leyen has already provided an outline of what that package, the 18th since February 2022, is supposed to target: Russia's financial sector, the "shadow fleet" and the Nord Stream pipelines, which are currently non-operational. On top of that, the president of the European Commission has pitched a downward revision of the price cap on Russian oil to further squeeze profits from worldwide sales, a crucial cash flow to sustain the full-scale invasion of Ukraine. "We need a real ceasefire, we need Russia at the negotiating table, and we need to end this war. Pressure works, as the Kremlin understands nothing else," von der Leyen said earlier this week after meeting with US Senator Lindsey Graham. But there's a catch: unlike other sanctions the bloc has imposed on Russia, such as the multiple export and import bans, the price cap has a political and practical dimension that exceeds the institutional sphere of Brussels and stretches across the ocean. More specifically, to Washington, DC. The price cap on Russian oil was introduced in December 2022 by the Group of Seven (G7) under the initiative of the Joe Biden administration. It was hailed as an ingenious, ground-breaking mechanism to mobilise the collective power of Western allies and cripple Russia's high-intensity war machine. As part of the plan, the G7, together with Australia, passed laws prohibiting their domestic companies from providing services, such as insurance, financing and flagging, to Russian tankers that sold seaborne crude oil above a predetermined price. The secret lay in market power: for decades, Western firms, particularly British ones, have dominated the sector of Protection and Indemnity (P&I), a type of insurance that gives shipowners broad protection and allows them to cover potentially huge costs from any accidental harm caused to the crew, their property or the environment. Due to the inherent risks of moving oil in high waters, P&I is today considered the norm in maritime trade and a must-have to be accepted in a foreign port. By leveraging their leading firms, the G7 intended to create an extraterritorial effect that would cap the price of Russian oil not only within their jurisdictions but all around the world. Following intense behind-the-scenes talks, the cap was set at $60 per barrel, a compromise between hard-line and cautious member states. The strategy only worked up to a point however. Although the price of Russian Urals oil gradually decreased, it consistently remained above the $60 mark, often exceeding the $70 threshold. The blatant circumvention was attributed to the "shadow fleet" that Russia deployed at high sea. These tankers are so old and poorly kept that they fall outside P&I standards and rely on alternative, obscure insurance systems that escape G7 surveillance. By the time the cap entered into force, Moscow "had spent months building a 'shadow fleet' of tankers, finding new buyers like India and China, and creating new payment systems, to the point that its oil does not need to be greatly discounted to sell," Luis Caricano, a professor at the London School of Economics, wrote in a recent analysis. "What should have been a blow became a manageable problem," Caricano said. With few sectors in the Russian economy left to sanction, Brussels has turned its sight to the cap as a means to tighten the screws on the Kremlin and secure a ceasefire in Ukraine. The Commission has reportedly pitched a revision between $50 and $45 per barrel, which the UK and Canada are believed to support. However, the US has so far refrained from endorsing a lower price cap, raising the stakes ahead of crunch talks at the G7 summit in Alberta, scheduled for mid-June. Now, a tough question emerges: Can the EU dare, and afford, to go it alone? In the strictest legalistic sense, the EU could, indeed, establish a lower price cap on its own. After all, the G7, as an organisation, lacks regulatory powers: each ally amends its laws individually to fulfil a collective mission. In this case, the EU introduced new legislation to prohibit EU companies – rather than, say, American or British companies – from servicing Russian tankers that bypassed the $60-per-barrel cap. Similarly, the bloc could now change the text to adjust that prohibition to a tighter price without waiting for other allies to reciprocate. Here appears the first roadblock: any change to sanctions must be approved by a unanimous vote among member states. It is highly unlikely that all 27 countries would choose to move forward with a lower cap without having an explicit guarantee that Washington will follow suit. Hungary, in particular, has fully aligned itself with the Trump administration and could veto any proposal opposed by the White House. Even if the bloc managed to overcome internal differences and agreed to a lower cap on its own, more formidable obstacles could impede its success. The bloc's revised cap would have to co-exist with America's existing cap. This means that one side of the Atlantic Ocean would apply a $50-per-barrel limit while the other side would apply a $60-per-barrel limit, creating a cacophony for all actors involved. "Different price caps across G7 countries could confuse maritime service providers and weaken overall enforcement," Petras Katinas, an energy analyst at the Centre for Research on Energy and Clean Air (CREA), told Euronews. "A solo move by the EU could cause friction within the Price Cap Coalition, damaging trust and coordination, both of which are crucial for keeping pressure on Russian oil revenues," Katinas added, warning the project could be rendered "largely symbolic". The legislative chaos would immediately benefit the Kremlin, which has long sought to exploit loopholes to evade and undermine international sanctions. Moscow, though, would also face hurdles: the continued crackdown on "shadow fleet" vessels has forced the country to increase its reliance on G7 insurance, which, in theory, could make it easier for the EU to apply the revised measure. "If the EU alone decides to tighten the screws on the cap, it's an additional constraint on Russia's oil exports but not as tight as with a whole of G7 approach," said Elisabetta Cornago, a senior researcher at the Centre for European Reform (CER). Besides practical snags and legal matters, there is geopolitics to consider. One of the reasons why the G7 initiative has fallen short of expectations is that, as the name suggests, it has remained a G7-exclusive plan. Countries in Asia, Latin America and Africa have refused to play along and join the coalition. China and India openly buy Russian crude oil, sometimes to refine it and resell it under a different label. Having the EU and the US go separate ways would further destabilise the Western alliance and create the impression of a transatlantic break-up. But for many, that is already a reality: the "Coalition of the Willing", born after Donald Trump unilaterally launched negotiations with Vladimir Putin, bears testament to the political divide. "The price cap was a G7 + EU initiative, and so in its current form, I do not see any pathway in which the EU could adjust the cap without the support of the broader coalition, including the US," said Ben McWilliams, an affiliate fellow with Bruegel. "That said, the EU is free to implement whatever measures it wants on its own domestic ships and insurance companies, which it could likely encourage the UK to join," McWilliams added. "So the EU can still move ahead – it would just need to be under a different institutional format than currently exists."
Euronews
12 hours ago
- Euronews
NATO allies have agreed to significant increases in defence spending
The US administration has appointed Lt. Gen. Alexus G. Grynkewich as both the next top US general in Europe as well as the SACEUR. The appointment by Trump will be especially welcomed following media reports in recent months that the US was considering relinquishing the role of SACUER which has always been appointed by a US president to NATO. "It's a very important decision and there is relief from NATO's point of view as it's a positive sign of American engagement and staffing," a US-based source familiar with the issue told Euronews. US Army General Dwight D. Eisenhower was NATO's first SACEUR in 1951, and the role has remained with the US ever since. 'Upon completion of national confirmation processes, Grynkewich will take up his appointment as the successor to General Christopher G. Cavoli, United States Army, at a change of command ceremony at the Supreme Headquarters Allied Powers Europe in Mons, Belgium, expected in the summer of 2025,' a statement from NATO read. Meanwhile, NATO defence ministers agreed to a significant surge in defence capability targets for each country, as well as moving to spending 5% of GDP on defence. They've agreed that 3.5% of GDP would be used for 'core defence spending' - such as heavy weapons, tanks, air defence. Meanwhile 1.5% of GDP per year will be spent on defence- and security-related areas such as infrastructure, surveillance, and cyber. However, the full list of flexibility has not yet been negotiated. 'These targets describe exactly what capabilities Allies need to invest in over the coming years,' NATO Secretary General Mark Rutte told journalists. The US has been pushing NATO allies to dramatically increase spending, and expects to see 'credible progress' immediately, according to US Ambassador to NATO Mathew Whitaker. 'The threats facing NATO are growing and our adversaries are certainly not waiting for us to re-arm or be ready for them to make the first move," 'We would prefer our Allies move out urgently on reaching the 5%,' he told journalists in a briefing on the margins of the meetings. Ambassador Whitaker also said the US is 'counting on Europe' to the lead in providing Ukraine with the 'resources necessary to reach a durable peace' on the continent. Mark Rutte reiterated NATO's recent warnings that Russia could strike NATO territory within the next couple of years. 'If we don't act now, the next three years, we are fine, but we have to start now, because otherwise, from three, four or five years from now, we are really under threat," he said, adding: "I really mean this. Then you have to get your Russian language course out, or go to New Zealand.' 'It's good to have continuity about the US in NATO, but with Ukraine it's a different story. I just don't think Trump really cares about Ukraine," the US-based source told Euronews. 'Trump just doesn't care about Europe – it doesn't make him richer or help him politically,' the source said. Referring to the forthcoming NATO summit taking place next month in The Hague, the source said the presence of Ukraine at the summit "will likely be scaled back", since the US will say, "they're not members' so they don't need to be there".
Fashion Network
2 days ago
- Fashion Network
Boots revenue rises, boosted by beauty, but profits hit by one-offs
Boots owner Walgreens Boots Alliance (WBA) files results every quarter but doesn't always give a huge amount of detail about the UK Boots chain. So it was useful to see Boots UK's latest set of accounts filed at Companies House, showing just how strong its recovery has been at least in terms of revenue. Boots UK is only one part of the wider Boost business but the figures for the leading UK health and beauty retailer do give us some insight. They cover the 12 months to the end of August last year during which time it operated 1,840 stores, down from 2,177 a year earlier. That fact was key as it helped contribute to the overall profitability of the business and boosted its margins. The Boots UK business is divided into Pharmacy (the sale of prescription drugs and pharmacy-related services, which accounts for a little over 30% of the total), and Retail, (which covers all the beauty, health and lifestyle products that it sells in its store stores and online). Retail makes up almost 69% of the business and the percentage has been skewing in its favour year on year. So first, let's look at the figures. Overall revenue during the year increased 3.7% to £7.313 billion. That followed an 8.3% jump in the previous year. Operating profit surged by an astounding 211.4% to £274 million (although that was heavily impacted by a one off benefit) and overall profit for the year was up an even more impressive 348.9% at £211 million for the same reason. As for that increase in profit, it included a one-off past service credit related to its pension scheme and excluding this, operating profit actually fell by £33 million. The fall was due to increased impairment related to stores and IT software, which more than offset the higher gross margin that it enjoyed. But it's clear that with higher margins from a rationalised store estate, profitability is moving in the right direction Earlier this year, the company warned that it faced increased cost pressures despite its stronger sales and was focused on navigating these. It's unclear how these might affect its business in the current financial year, although its parent company's next set of results might give some kind of clue. That said we won't be getting regularly-filed results from US-based WBA for that much longer given that it's being taken private by Sycamore Partners with the deal expected to complete by the end of this year.
