Rubber Futures Pull Back

Rubber futures fell below 170 US cents per kilogram in mid-August, retreating from a two-week high, as weak Chinese economic data spurred concerns over slowing demand in the world’s largest consumer of natural rubber. In July, China’s growth faltered, with retail sales and industrial output both missing forecasts, while the jobless rate climbed to a four-month high. China accounts for about 40% of global rubber consumption, driven largely by its automotive and manufacturing sectors. Adding to demand worries, US automobile sales fell in June, raising the prospect of weaker tire and related rubber product demand. On the supply side, key rubber-producing regions in Southeast Asia are gradually entering their peak production season in the second half of the year, in line with typical seasonal patterns. Cushioning some of the price losses, persistent heavy rains and flood warnings in Thailand, the world’s largest rubber producer, have raised concerns over potential supply disruptions.