The latest monthly report from the European Rubber Trade Association (RTAE) indicates that rubber prices continue to fluctuate within a narrow range of 4 euro cents per kilogram, with no significant impact on physical demand following the end of the European summer holidays. News of production cuts by major German automakers and the halt in production by Jaguar Land Rover has kept the outlook for tire and rubber demand weak.
Compared to the European market, RTAE noted that the US and Chinese economies performed "relatively robustly, but the automotive sector was not a major growth driver." The report also pointed out that real incomes for smallholder rubber farmers in Southeast Asia have fallen to "long-term lows."
This situation increases the likelihood that rubber farmers will switch to other crops in search of higher returns. RTAE warned: "The risk of a sharp price increase when consumer demand for rubber recovers cannot be ignored." At the same time, RTAE stated that "uncertainty remains regarding the economic outlook and rubber prices."
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