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Rubber demand expected to return to positive growth in June

The global rubber demand is expected to return to positive growth in June 2020 with the expectations of natural rubber consumption growing 0.4 per cent after declining in April (-23.1 per cent) and May 2020 (-10.1 per cent).

The Malaysian Rubber Board (MRB) said demand from China, the world's largest consumer of natural rubber, is expected to increase to support its automotive sector growth, with vehicle sales in April 2020 rising 4.4 per cent year-on-year after recording negative growth over the previous 21 months.

"The situation reflects the rubber market is moving positively in tandem with the increase in world’s natural rubber demand as most countries around the world have gradually eased lockdowns and reopened their economies," it said in a statement.

This would give a good start to the global economic network, including the natural rubber market and demand, the MRB said, adding that after experiencing a sharp fall in prices on April 2, 2020, the SMR 20 rubber prices now record a positive movement in the range of between RM4.60 and RM4.95 per kilogrammes from April 6 to May 29, 2020.

One of the main factors supporting the price movement was the recovery of the world's natural rubber demand with the easing movement restrictions by most countries, especially China which has resumed operations in the manufacturing industry after imposing lockdowns since late January 2020 due to COVID-19.

It is also supported by positive growth of the global crude oil market, which is currently at US$35 per barrel, and a global shortage of natural rubber supply, as world’s rubber production is expected to decline 2.3 per cent to 13.43 million tonnes in 2020 compared to the previous year due to the Movement Control Order (MCO) and the wintering season in rubber producing countries.

"However, the supply and demand also depend on a country's effectiveness in effectively in managing the country’s economic recovery plan and containing Covid-19 effectively and efficiently," it said.

Meanwhile, the government will continue to protect the welfare of smallholders by continuing to implement the Rubber Production Incentive (IPG) to help ease their burden during the period of low rubber prices, as well as to encourage them to continue tapping to ensure enough supply of raw materials for the processing and manufacturing of rubber-based goods.