At the seminar “Trends and Prospects of the Rubber Industry: Adapting to Future Volatility” organized by the Vietnam Rubber Association (VRA), Mr. Jom Jacob, Chief Analyst and Co-founder of WhatNext Rubber Media International, presented an optimistic forecast for global natural rubber (NR) prices in 2023, particularly during the first half of the year.
Global Natural Rubber Market Outlook 2023
According to Mr. Jacob, while the COVID-19 pandemic has largely subsided, global economic activities and businesses remain under significant threat from persistent uncertainty. No industry, including rubber, is immune to the risks arising from macroeconomic instability, geopolitical tensions, and fluctuating demand.
Such uncertainty makes business decisions more difficult, raises investment risks, and lowers profitability expectations.
To help stakeholders in the rubber sector develop effective strategies, Mr. Jacob divided 2023 into two distinct phases:
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Phase 1: The first half of 2023 (January–June)
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Phase 2: The second half of 2023 (July–December)
Price Recovery Expected in the First Half of 2023
In Phase 1, natural rubber prices are expected to rise and maintain an upward trend, though the gains may be limited by high inventory levels accumulated during the latter half of 2022.
Mr. Jacob noted four major risk factors that could affect this positive outlook:
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A resurgence of COVID-19 leading to renewed lockdowns in China.
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Aggressive interest rate hikes by the U.S. Federal Reserve (FED).
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Worsening of the Ukraine conflict or other geopolitical crises.
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A sharp appreciation of the U.S. dollar.
However, during its December 2022 meeting, the Federal Open Market Committee (FOMC) adopted a less aggressive stance, slowing the pace of rate hikes (after four consecutive 75-basis-point increases in 2022). This moderation signals a more stable global financial environment for 2023, which could encourage speculative buying in the natural rubber market.
Supply Constraints and Chinese Demand to Support Prices
Mr. Jacob emphasized that China, which accounts for 42% of global NR consumption, typically has no domestic rubber production during the first quarter of the year (January–March) due to cold temperatures.
Chinese rubber growers halt tapping operations by mid-December each year, and it takes several months for production to resume after the annual leaf-fall period.
Consequently, Chinese companies increase rubber imports before the Lunar New Year, anticipating a supply shortage from February onward, as major producing countries also enter their seasonal leaf-shedding phase.
During the early months of 2023, global output and consumption are projected to remain roughly balanced, with output potentially lagging demand. This limited supply is expected to support global NR prices, particularly between January and June 2023.
As a result, natural rubber is likely to benefit from favorable supply-demand fundamentals, sustaining a gradual upward trend through the first half of the year.