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       PETALING JAYA: Glove makers and tyre manufacturers may have to brace for higher material costs in the coming months.

       It is worth noting that while Malaysian glove makers are largely focused on nitrile gloves at 60%, natural rubber gloves make up the remaining 40% of total production.

       According to the Rubber Market Intelligence Report by the Association of Natural Rubber Producing Countries (ANRPC), global natural rubber prices are expected to remain supported in the short-term due to supply and demand disruptions as a result of the Covid-19 pandemic.

       It added that the strengthening of crude oil prices would also provide support to natural rubber prices moving forward.

       “The pent-up demand arising from the revival of economic activities world over, lopsided increase in demand, and the anticipated 200,000 tonnes of deficit in the current year can help natural rubber prices gain further in the last two months of the year,” ANRPC said.

       The association highlighted that the demand for natural rubber will remain elevated especially from Europe, the United States, India and Japan due to pent-up demand driven by the lifting of Covid19-related restrictions, revival of transportation and other economic activities.

       It said, based on history, the world’s consumption of natural rubber had seen “abnormal growth” following historic catastrophes.

       After World War I, ANRPC said the world’s consumption of natural rubber surged by 33%, a 45% jump was seen in 1922 following the Spanish Flu, about 19% increase in 1933 after the Great Depression, and a whopping 121% spike in 1946 immediately after World War II.

       “Although such abnormal growths are not expected in the present scenario, a moderate short-term boost can be expected as life returns to normalcy after nearly two years of lockdowns and restrictions,” it said.

       ANRPC said it expected natural rubber consumption to increase by 8.3% to 14.0 million tonnes in 2021, slightly higher than the world’s supply of 13.8 million tonnes.

       It added that the world’s consumption of natural rubber is anticipated to increase further between to 4% and 5% in 2022.

       Moreover, the year from 2023 is expected to see natural rubber becoming globally short of supply and the deficit progressively widening in the subsequent years through 2028.

       “The long phase of the deficit can extend to 2031, according to the projections made on the basis of the planting trends and potential expansion of mature areas in individual countries,” ANRPC said.

       On the supply side, it said, despite the removal of almost all the Covid-19-related restrictions in major producing countries and a recent recovery in natural rubber prices, world production of natural rubber is expected to remain almost unchanged in November and December 2021 compared wth the previous two months of September and October.

       Thailand, Indonesia, Vietnam, China, India, and Malaysia represent 81% of the world supply of natural rubber.

       Over the last five years, the association pointed out that the natural rubber industry had been gripped by excess production capacity caused by “abnormal expansion” of the area occupied by mature trees.

       “Although the global mature area is expected to expand by nearly 250,000ha in 2022, the resultant increase in production is likely to be absorbed by a robust global demand.

       “Crude oil prices are expected to gain further strength in November and December 2021 supported by high winter demand for fuel oil and the pent-up demand arising from the revival of economic activities and normalisation of the transportation sector including the aviation industry,” it added.