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ANRPC observes a positive sign in Q3 global rubber consumption

Turnaround in China, a positive sign; however, risk factors weigh

The worst seems to be over as far as global natural rubber consumption is concerned. A report prepared by the Association of Natural Rubber Producing Countries (ANRPC) sees a 1.4 per cent rise in global rubber consumption during the third quarter (July-September).

The report assumes significance at a time when the IMF has scaled down the global economic outlook to (-) 4.9 per cent from (-) 3.0 per cent predicted in April. The global consumption has fallen 15.7 per cent during the first half (January-June) and is expected to enter into a positive territory in the coming days.

‘The ANRPC report on NR: Trends & Statistics, June’ pointed out that the economic activities are likely to improve further as more countries are in the process of relaxing the lockdown. The key factor that led to the decline of NR prices has almost disappeared, though a few countries stand exception due to the continued spread of the virus.China factorIn China, the report said a 0.8 per cent rise in consumption is anticipated during the third quarter against 20.1 per cent dip during the first half. As measured in terms of the Purchasing Managers Index (PMI), the manufacturing activities in China rose to six months high in June. The auto sales in China, the world’s largest auto market, rose by 14.5 per cent in May. This is after posting a 4.4 per cent rise in April and a 43 per cent drop in March.

According to the report, these positive turnarounds in China — the country accounting for more than 40 per cent of the global rubber demand — is crucial for market sentiment. The Covid situation has removed a huge quantity of nearly one million tonnes of the potential supply of rubber from the world market.Risk factorsHowever, the report warned that the positive outlook is subject to some risk factors.

The possible delays in implementing effective stimulus policies or inability of resource-poor countries to implement strong policy support measures can severely affect the economic recovery measures and even result in the closure of several units, especially in the MSME sector.

The Covid pandemic is likely to continue impacting economic activities and the demand for rubber, as the infected cases are still on the increase in major consuming countries such as India and the US.

Besides, the increasing geopolitical issues and bilateral trade conflicts can dim the prospects of recovery in natural rubber demand and commodity prices, the report said.

The Hindu Business Line