Latest news with #AssociationofNaturalRubberProducingCountries
Euronews
14-03-2025
- Business
- Euronews
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.
Yahoo
06-03-2025
- Business
- Yahoo
Global rubber shortfall looms in 2025 on stagnant output, association says
By Ashley Tang and Rajendra Jadhav KUALA LUMPUR (Reuters) - Global natural rubber production is expected to fall short of consumption for the fifth consecutive year in 2025, as higher prices fail to encourage tapping in major producing countries such as Indonesia and Vietnam, a senior industry official said. "Demand has been consistently growing in countries such as China, India and Thailand, but production is lagging because of lower prices, which rose only last year," Lekshmi Nair, senior economist of the Association of Natural Rubber Producing Countries (ANRPC) told Reuters on Wednesday. This production shortfall is likely to sustain firm global prices, which reached a 13-year high in late 2024, and consequently increase production costs for tyre companies. According to ANRPC, global production is expected to rise by 0.3% to 14.9 million metric tons in 2025, while demand is projected to grow at a much faster rate by 1.8% to 15.6 million tons. After lagging behind other plantation crops like oil palm, coffee, and cocoa for more than a decade, rubber prices surged in the last quarter of 2024 due to erratic weather that curtailed production in Asian countries. The current rubber shortage is due to tepid prices over the last seven to eight years, which resulted in lower replanting, significant slowdown in new planting, and incentivised rubber farmers to switch to more profitable crops, Nair said. Indonesia, the world's leading palm oil producer and second-largest rubber producer, is experiencing a decline in rubber production, largely as a result of farmers converting to the more profitable oil palm cultivation, she said. Indonesia's production in 2025 is expected to decrease by 9.8% from the previous year, totalling 2.04 million tons, while Vietnam, the third-largest producer, may see a 1.3% decline to 1.28 million tons, according to ANRPC estimates. In contrast, Thailand, the world's largest producer, is forecast to experience a 1.2% increase in production in 2025, following a 0.4% decline in 2024. Rubber production has recently been rising only in West African countries such as Ivory Coast, but that growth is insufficient to fulfil rising global demand and offset output losses in Southeast Asia, she said. Demand from China and India, the world's largest consumers of natural rubber, is expected this year to rise 2.5% and 3.4%, respectively, according to ANRPC estimates.
Reuters
05-03-2025
- Business
- Reuters
Global rubber shortfall looms in 2025 on stagnant output, association says
KUALA LUMPUR, March 5 (Reuters) - Global natural rubber production is expected to fall short of consumption for the fifth consecutive year in 2025, as higher prices fail to encourage tapping in major producing countries such as Indonesia and Vietnam, a senior industry official said. "Demand has been consistently growing in countries such as China, India and Thailand, but production is lagging because of lower prices, which rose only last year," Lekshmi Nair, senior economist of the Association of Natural Rubber Producing Countries (ANRPC) told Reuters on Wednesday. This production shortfall is likely to sustain firm global prices , which reached a 13-year high in late 2024, and consequently increase production costs for tyre companies. According to ANRPC, global production is expected to rise by 0.3% to 14.9 million metric tons in 2025, while demand is projected to grow at a much faster rate by 1.8% to 15.6 million tons. After lagging behind other plantation crops like oil palm, coffee, and cocoa for more than a decade, rubber prices surged in the last quarter of 2024 due to erratic weather that curtailed production in Asian countries. The current rubber shortage is due to tepid prices over the last seven to eight years, which resulted in lower replanting, significant slowdown in new planting, and incentivised rubber farmers to switch to more profitable crops, Nair said. Indonesia, the world's leading palm oil producer and second-largest rubber producer, is experiencing a decline in rubber production, largely as a result of farmers converting to the more profitable oil palm cultivation, she said. Indonesia's production in 2025 is expected to decrease by 9.8% from the previous year, totalling 2.04 million tons, while Vietnam, the third-largest producer, may see a 1.3% decline to 1.28 million tons, according to ANRPC estimates. In contrast, Thailand, the world's largest producer, is forecast to experience a 1.2% increase in production in 2025, following a 0.4% decline in 2024. Rubber production has recently been rising only in West African countries such as Ivory Coast, but that growth is insufficient to fulfil rising global demand and offset output losses in Southeast Asia, she said. Demand from China and India, the world's largest consumers of natural rubber, is expected this year to rise 2.5% and 3.4%, respectively, according to ANRPC estimates.
