India, China drive up rubber prices
October 8, 2010

Unseasonally high rains, unfavourable age structure of trees, changing geographical composition of yielding area, labour shortage and unskilled tapping will lead to demand outstripping natural rubber supply, resulting in high prices and a soaring futures market, according to the Association of Natural Rubber Producing Countries (ANRPC).

The ANRPC which comprises of Thailand and Indonesia, the world’s top two producers, along with Cambodia, China, India, Malaysia, Papua New Guinea, Philippines, Singapore, Sri Lanka and Vietnam expects natural rubber production to rise by 6.3 percent to reach 9.47 million tonnes (mt) in 2010. Next year, natural rubber output is likely to be steady to lower than this year, according to ANRPC, which represents 92 percent of the world’s total production. Global consumption of Natural Rubber will touch 14.2 mt by 2020, from 10.2 mt estimated for the current year.

Meanwhile growth rates of 20-30 percent in automobile sales, leading to higher tyre sales in China and India is boosting rubber demand. World over, the sale of passenger car tyres is expected to rise 10.4 percent and commercial vehicle tyres by 13.5 percent this year. The average annual growth in the sale of passenger car tyres during the next five years will be 5.1 percent and that of commercial vehicle tyres will be 7.28 percent

“Prices will continue to trade higher. Stockpiles with tyre makers are very thin and supplies are falling due to the weather,” Paul Sumade Lee, director of Sri Trang Agro-Industry Pcl STA.BK, the world’s No. 1 natural rubber producer and exporter, told Reuters.

“The market is going to be very tight for three to four years and demand is rising, but natural rubber production will not rise at the same speed because of older plantations,” Stephen Evans, secretary-general of Singapore-based International Rubber Study Group (IRSG), added.

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