September 2024: Gum Rosin Asia Market Gains Ground While South America Faces Challenges

Shanghai, (China): In the first half of September, Asia Gum Rosin prices have experienced stability to modest increase after two months of declines. A confluence of shifting demand patterns, potential supply constraints, and strong upstream costs driven by production issues in the region has shaped the outlook for the months ahead, with players finding larger hike attempts for the forthcoming months. However, Gum Rosin sentiments in South America have been mostly downbeat since the beginning of this month, weighed down by low production cost and comfortable availability. Even though healthy demand for Gum Rosin has remained supportive, a stable-to-lower trend has continuously governed over the markets.

After experiencing a bearish rally in the past month, Gum Rosin prices have strengthened in the Chinese market due to low inventory pressure. The support from feedstock Pinewood prices was adequate for Gum Rosin, which saw its prices remain on the higher end throughout the month. This resulted in an increase in the price realization of Gum Rosin in the domestic market. However, several market players observed demand for Gum Rosin from the downstream paints and coating, rubber as well as from adhesives and sealants have remained stable to low in the domestic market as consumption from the key end-user automotive and construction sector has not improved significantly amid property crisis and macroeconomic headwinds. Meanwhile, procurements from the overseas market notably the US and Europe have steadily recovered amidst the replenishing activity ahead of the upcoming holidays which promoted the Chinese producer to raise their prices. As per the market sources, China’s exports to its major trading patterns mainly the US, European Union, and Association of Southeast Asian Nations all increased in August. Exports to the EU grew the most up by 13%, compared with July data. Prices of Gum Rosin FOB Huangpu were settled at USD 1172/MT with a monthly increment of USD 29/MT during August.

In addition, the weather conditions have significantly impacted Gum Rosin production in the domestic market also several manufacturers have lowered their operating rates which further reduced the market supply of Gum Rosin. Moreover, China manufacturing Purchasing Manager Index remained in the contraction zone (i.e., below 50) during August, pointing to a persistently weakness in factory activity. On the other hand, China’s Shanghai-Ningbo, Malaysia’s Port Klang, and Singapore’s ports have been experiencing significant congestion from high shipping volumes and operational challenges. Although wait times at these ports have peaked and are starting to ease, ongoing delays will continue to support elevated spot rates. Adding to existing congestion issues in the region, a hazardous goods container exploded aboard the cargo ship YM Mobility while it was docked at Ningbo- Zhosuhan port in China on August 9. The explosion led to the closure of the Phase III Terminal for 60 hours over the weekend. Still, market players don’t expect this explosion to have a significant effect on the market.

Nonetheless, Gum Rosin prices have continued to decline in the Brazilian market due to low-cost support from feedstock Pinewood. Though, domestic demand for Gum Rosin from the downstream paints and coatings, rubber, and other industries has increased due to a rise in consumption from the key end-user automotive and construction sector. As per the market report, Brazil’s auto production increased 5.2% in August from July to 259,613 units, despite this Gum Rosin prices decreased. Furthermore, material availability was abundant due to the continuous production of Gum Rosin in the domestic market. Thus, prices of Gum Rosin fob Santos were offered at USD 943/MT during the same time frame.

Looking ahead, ChemAnalyst anticipates Gum Rosin prices might increase in Asia and South American markets in the hope of a rise in feedstock prices. Furthermore, the demand from the downstream derivative industry is likely to rise in the forthcoming months, which may further put additional pressure on Gum Rosin prices. In addition, the operating rates is not expected to improve which may lead to supply shortages in both the domestic and international markets.