The prices of natural rubber are being driven by improved demand in India, China, Europe and the US. China and India represent 43 per cent and 8 per cent of the world’s total natural tyre consumption, respectively. And as manufacturing activities are gradually restoring in these countries, there has been a huge demand for raw materials.

Another significant reason for the positive momentum in this sector is the announcement of the US Federal Chair not to reduce the stimulus measures, which is an optimistic sign for commodities, including the natural rubber.

However, the report further says that the high-risk activities currently going on in the rubber future market, especially in the Shanghai Futures Exchange, can remain obstructed as there are concerns that China will tighten its regulatory grip on various technological companies and pose a challenge to global recovery which is being disrupted by logistics and deficiency of semiconductor chips.

While the atmosphere in the physical market may be favourable, less excitement in the speculative activities in the futures market can be disheartening for the natural rubber prices in the short term.

What about the physical prices of TSR?

On the other hand, a relatively favourable demand-supply has supported the physical prices of TSR (SMR 20 and STR 20) which is considered the most accepted form of natural rubber and predominantly used in the manufacturing of automotive tyres, constitutes around 70 per cent of the total global output.

Surprisingly, it’s a deviation from the regular pattern, which has given a boost to physical markets of TSR, which has outperformed the rubber futures, backed up by an improved outlook.