After experiencing a remarkable 4.6% surge during previous month, Brazil’s Gum Rosin market is now facing a downturn in December 2024. The month began with a noticeable shift in Gum Rosin pricing trends, marking a distinct contrast to the positive momentum seen just a month ago. This reversal can be attributed to a combination of factors, primarily the holiday slowdown, the strengthening of the US dollar, and weaker export rates.

In November, Gum Rosin prices soared in Brazil, propelled by a blend of domestic supply constraints and robust demand from export-driven markets. The demand from Brazil’s key industries, including packaging, construction, and agribusiness, also played a crucial role in pushing Gum Rosin prices upwards. Also, with growing attention to sustainable packaging solutions and increased activity in the construction sector, the market had been buoyed by strong consumption, both domestically and abroad.

However, as December approached, the Gum Rosin market began to show signs of slowing down. The typically quieter holiday season, coupled with global economic shifts, resulted in a cooling of demand that dampened the previously soaring prices.

As is typical in many industries, the final month of the year brought a seasonal slowdown in activity. With factories and businesses winding down for the holidays, demand for Gum Rosin fell off sharply, especially in the packaging and construction sectors. As companies prepare for the holidays and year-end closures, production volumes dipped, and the urgency to purchase resins waned. While this seasonal pattern has been a fixture of the market for years, it played a decisive role in the decline of Gum Rosin prices in the first half of December.

Another factor contributing to the Gum Rosin price decline was the strengthening of the US dollar. With global currency markets shifting, the value of the dollar rose against the Brazilian real, making Brazilian exports less competitive. As the dollar gained strength, Brazilian goods, including Gum Rosin, became more expensive for foreign buyers, dampening export demand.

The weaker export rates, especially from Europe and the US, compounded the challenges faced by the Brazilian Gum Rosin market. Therefore, despite the strong export-driven demand seen in the previous months, December’s market saw a noticeable slowdown. Export rates, particularly to key regions like the US and Europe, fell as countries adjusted to the economic realities of the holiday season. This decrease in exports combined with the weaker global demand for resins as a whole, led to an oversupply situation in Brazil’s domestic market.

In addition, the continued disruptions in the global supply chain and the fluctuation in energy prices only added to the uncertainty, but they were not enough to prevent the market from correcting itself. With buyers now cautious and many holding off purchases until the new year, prices began to soften as supply outpaced demand.

Therefore, with the holiday slowdown taking its toll, the Gum Rosin market in Brazil faces a more subdued outlook for the remainder of December. While the 4.64% price increase in November was driven by a mix of strong demand and tight supply, December’s decline reflects the cyclical nature of the market and the external factors that influence it.