Decrease in rubber price but less likely to fall too deep

According to the Business Market Department (Vietnam Rubber Group), this week, natural rubber (NR) prices on both the forward market and the cash market recorded a fall in comparison with the previous week.

The main reasons indicated by experts are the effects caused by the new variation of the virus - Omicron, increase in the dollar exchange rate, fall of crude oil prices, and the US inflation report which was released on December 10^th.

Meanwhile, the consumption demand for NR still doesn’t show signs of decreasing. According to statistics announced by China’s General Administration of Customs on December 7^th, China has imported a total of 661.000 tons of natural and synthetic rubber (including latex) in November 2021.

This is an unnatural development in the context of the price showing a downward trend. This also shows that rubber prices are under pressure from different elements besides supply and demand. In which, market sentiment is being impacted more.

In the short term, rubber prices are under the decreasing correction’s pressure mainly stemming from market sentiment. Meanwhile, the supply and demand elements are showing positive support for rubber prices.

In this context, although facing many pressures, a scenario in which rubber prices fall as low as the level that they did before is less likely to be realized. Apart from the Dollar gaining more value and the shipping freight rates increasing being obvious influencing factors, the other elements only stay as concerns, especially information regarding the global pandemic’s impacts.

Once these details show positive signs, the rubber market will make a recovery. If that scenario is to happen early, it would likely be after the 2022 Lunar New Year.