Rubberpocolypse
Rubber is a commodity you likely don’t hear about very often, usually, other commodities such as oil, minerals, and natural gas take the spotlight. Despite this, Rubber plays an extremely integral role in the functioning of the world economy because it is in so many products. In fact, it is considered one of the most important polymers for human society.
Rubber is an essential raw material used in the creation of more than 40,000 products. It is used in medical devices, surgical gloves, aircraft and car tires, pacifiers, clothes, toys, etc. When it comes to investing, however, rubber has just taken a hit with futures falling almost 12% in only a month. So, what caused this? It seems that there a multitude of causes but some of the main ones include climate change, the Covid-19 pandemic, a destructive fungus, and the fight for shipping containers.
Despite the dwindling supply or access to the supply, the global demand for rubber seems to be going up. This is because there is an expected increase in the number of cars on the roads and therefore, more tires that need to be used. One analysis predicts the natural rubber market could be worth nearly $68.5 billion by 2026 – a major jump from its $40B evaluation in 2020. So where is all this rubber coming from? Well, the global economy is dependent on Asia for 90% of the natural rubber supply. In fact, in March 2021 alone the US imported $140 million worth of natural rubber according to Census data. What do you think about Rubberpocolypse, and is rubber an investment you would look into?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
