Export earnings from rubber and rubber products grow by 7.1% YoY

Export earnings from rubber and rubber finished products have reported a growth of 7.1%YoY to USD 102.3Mn in Jun 2022 compared to USD 95.5Mn in Jun 2021, while earnings from pneumatic and retreated rubber tyres and tubes also increased by 15.2%YoY during the month, a review issued by First Research states.

Growth in export earnings was mainly attributable to the continuous rise in rubber auction prices, it states.

The review further states:

“Rubber auction prices continued to elevate during the month of Jun 2022 boosting the earnings growth for the period. Global rubber prices witnessed a plunge during the period yet displayed an increase of 4.9% on a YoY basis on the back of recessionary fears. Accordingly, the monthly local average auction price of rubber for Jun 2022 improved to LKR 1,400/Kg (+122.4%YoY) while YTD price increased by over 100% owing to the steep depreciation of LKR against USD by 80.0%YTD.”

“Although steady demand for all grades of rubber (RSS, Latex crepe and synthetic) was witnessed in Jun 2022, total production hampered to 5.2Mn Kg from 7.2Mn Kg (-27.8%YoY) amidst wet weather conditions that disrupted rubber tapping along with delays in transportation due to the prevailing fuel crisis. Meanwhile, rubber earnings for the 1H2022 reported a slight decline of 0.7%YoY to USD 516.6Mn, although total production dropped by 15.6%YoY during the period amidst the outbreak of the fungal leaf fall disease. Major export markets for Sri Lankan natural rubber are Pakistan, Germany and Japan, whereas US, Germany and Belgium are the key export markets for rubber finished products.”

“Rubber prices have witnessed a growth trend since the beginning of the year, yet it has adjusted downward in the recent auctions in line with the global market price trend while cropping season has started in most of the rubber-producing regions leading the rubber price to drop. Further, the fluctuations in crude oil prices, which influence synthetic rubber prices, have also impacted the prices of natural rubber. On the other hand, with the availability of chemical fertilizer improving in the forthcoming months, we expect plantation sector to command higher yields in 2H2022 while further discussions have started with World Bank, Asia Developments and other international financial institutions to obtain funds to import fertilizer. In addition to that, we may see global consumption of rubber gloves peak over pre-pandemic level supported by increased awareness of health care and hygiene among people which ensures demand for rubber to boost in 2H2022. Considering the stability in production volume and the current price which remains above 2021 level, we expect rubber plantation to see an upside in 2H2022,” First Capital review states.