FX.co ★ Rubber Futures at Near 2-Week Low

Rubber futures recently hovered around 171 US cents per kilogram, marking a nearly two-week low due to sluggish demand, especially from China, the world's largest consumer. The rubber market is heavily influenced by the automotive sector, but growth in the electric vehicle (EV) market has decelerated, and ongoing supply chain challenges are exerting pressure on the industry. Additionally, the European Union’s intentions to delay and amend regulations concerning deforestation are contributing to the downward trend. On the supply side, concerns remain high. Persistent adverse weather conditions in southern Thailand, the foremost producer of natural rubber globally, have sparked worries about potential disruptions in production. Simultaneously, China's key rubber-producing areas, including Yunnan and Hainan, are entering their off-season. During this period, latex output typically decreases as rubber trees go into their wintering phase. Consequently, production levels and port inventories in China are anticipated to keep declining.