Natural rubber prices expected to decline

European Rubber Journal recently released news about natural rubber price forecasts which is important to know for tire recycling companies.

According to Hidde Smit – a consultant and analyst of Rubber Forecasts – natural rubber (NR) prices will be going up during the next two quarters of 2017 before commodity surplus weighs in on the market again. Price increase will occur due to severe winter season in Thailand as well as reduction in tapping activities.

In his speech during the Tire Technology Expo in Hannover, Germany held this February, Mr. Smit pointed out that tapping intensities in rubber-producing countries went down predominantly due to decreased prices since 2013 (below USD 2.00) as well as severe floods in Thailand – the biggest natural rubber producing country – the beginning of the year.

Due to the increasing demand and slowdown in tapping, the expert predicts that NR prices will go up to USD 2.45 per kg during the next two quarters of 2017. However he says that afterwards they will go down. This could happen because Thailand will come back to the market and proceed tapping and other rubber-producing countries may see hope and thus continue tapping, too. That is when the big surplus arises again to weigh on the market.

Smit also asserts that NR prices will slightly decrease for several years and then a recovery will take place when the surplus production peak is over. The expert estimates that by some late 2020s, NR prices might reach USD 3.00 per kg.

Apart from that, Smit commented the correlation between natural rubber and butadiene. The analyst observed butadiene prices following the price of oil till 2009. Surprisingly, since 2009 on butadiene follows natural rubber prices. Hidde Smit says this is due to the idea of substitution of natural rubber with synthetic one. In Hidde’s quarterly model, there is a one quarter lag between NR and butadiene prices. In the current quarter, butadiene went up higher than NR mainly due to speculations, adds Hidde.

Article source: European Rubber Journal

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