Malaysia's natural rubber imports hit a record high of 718,000 metric tons in 2009, and the strong trend is likely to continue with a 26% projected on-year growth in the January-March quarter, the Association of Natural Rubber Producing Countries said in a recent report.
Imports are projected at 225,000 tons during the first quarter, including 70,000 tons in January, 75,000 tons in February and 80,000 tons in March.
ANRPC said the strong import demand for natural rubber in Malaysia, the world's third-largest exporter, is one of the reasons for bullish global prices, which hit a 15-month high in December.
For the first time in 2009, Malaysia's imports of natural rubber exceeded exports, which are estimated at 703,000 tons.
However, a large part of the imports was used for blending with small amount of synthetic grades to make compound rubber which was then exported, mostly to China.
China doesn't levy duty on compound rubber imports from some Asean countries under a free trade agreement.
Malaysia's total compound rubber exports hit a record high of 430,000 tons in 2009, up 58% on year and are projected at 100,000 tons in the first quarter of this year.
Large volumes of this compound rubber are made of natural grades imported from Thailand, Indonesia and some African countries.
Compound rubber comprises of 97%-99.5% natural grades.
The continued buoyancy in prices has tracked a surge in demand, especially in China and Malaysia, according to the ANRPC report.
Malaysia's natural rubber imports increased 64% during the second half of 2009.
"If a country that is a major supplier to the global market sharply increases imports, even if partly for exports after processing, it is bound to support prices," said an exporter in Singapore who trades in Malaysian and Indonesian rubber.
He said while a large part of Malaysia's rubber imports are for processing for exports to China, local demand is also on the rise, particularly in the gloves industry.
Malaysia is the world's largest producer and exporter of gloves, for which latex rubber concentrate is the main raw material.
Latex concentrate accounts for more than half Of Malaysia's total natural rubber imports.
However, its share in Malaysia's natural rubber imports, 67% in January 2009, was estimated around 54% in November, indicating the burgeoning imports of dry rubber, which is mostly exported after being processed into compound rubber.
Traders said dry rubber imports by Malaysia for subsequent exports as compound grades has created a global supply lag and supports prices.
During the first half of 2009, major producing countries including Malaysia imposed restrictions on the exports of natural rubber in order to shore up prices, which fell sharply due to a slump in demand amid the global recession.
To circumvent restrictions, many exporters preferred to ship out rubber in compound form.
A shortfall in local production amid adverse weather, unremunerative prices, fall in acreage and lower yields has tightened local supplies, prompting traders and local consumers to import larger volumes.
Natural rubber output in Malaysia fell 22% in 2009 to around 835,000 tons, the lowest in a decade.
The area under production shrank by 20,000 hectares. The average annual yield declined in 2009 to 1,128 kilograms a hectare from 1,411 kg/hectare in 2008.
(Source: irco.biz)
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