C.J. Punnathara
Kochi April 27
A faster than expected global economic recovery and the resultant acceleration in demand for natural rubber are likely to dominate sentiments in the global rubber markets in the short to medium-term. Also, global demand is likely to receive a further boost as a section of tyre manufacturing industry which stayed away during the wintering months are expected to re-enter expecting better availability in the coming months, the Association of Natural Rubber Producing Countries (ANRPC) has said.
Over 45 per cent of the global demand for rubber comes from China, India and Malaysia. The data on import and consumption of rubber in these countries during the first quarter this year reveal that natural rubber has already entered into a demand-driven bullish phase. While consumption in India rose 12.8 per cent, imports have soared by 124 per cent. More demand is expected in the months to come as the installed capacity to manufacture bus and truck tyres is poised to more than double, the Automotive Tyre Manufactures Association has pointed out.
“The likelihood of prices slipping this year is quite remote. In fact, as demand firms up in the months to come, prices are likely to improve further in the coming days.
Indications are that global spot prices could breach the $4-mark in the not-too-distant future” said Mr N. Radhakrishnan, former President of the Cochin Rubber Merchants Association.
Consumption in China increased 29 per cent during the first quarter, while natural rubber imports soared 70 per cent. Malaysia has posted 13 per cent growth in consumption, while imports rose 28 per cent.
Like India, Malaysia is also fast becoming a net importer of natural rubber. Preliminary indications are that Malaysia imported 1,83,000 tonnes of rubber in first quarter.
In the days to come, Malaysian demand is likely to be fuelled by greater demand from the domestic glove industry as the US has stepped up its health bill by $ 940 billion.
Global production
Even as consumption and imports into the major-consuming countries have registered double-digit growth, global production is expected to rise moderately by 6.2 per cent during the current year, the ANRPC that accounts for 94 per cent of the global production and supply of natural rubber said. However, this is better than the 3.6 per cent fall recorded last year.
Global production is expected to rise modestly from 8.821 million tonnes (mt) in 2009 to 9.367 mt in 2010. Most countries, including India, expect a moderate increase in production, while Malaysia alone expects production to grow faster by 16 per cent. Increased production is expected from growth in yielding area under rubber. Yielding area in India is expected to go up by 6,000 hectares, while China is expected to record a growth of 22,000 hectares, Vietnam (23,000 hectares) and Cambodia (10,000 hectares).
Labour shortage is not only becoming rampant in the growing regions of South India but is also extending to countries such as Malaysia. ANRPC reported that 85,000 hectares of mature rubber area which are lying untapped in Malaysia are now being tapped as prices have risen to all-time highs.
Although availability usually improves in April after the winter dormancy, the Association pointed out that it could be different this year. As prices have remained high, farmers have not been cutting down old trees and replanting with improved varieties in recent years and this is likely to affect the yield this year as well.
Limited options
Moreover, farmers have limited options of increasing yield as high prices had ensured that they extracted the maximum yield from their trees. Finally, consumers who have stayed away from the market in the past couple of months on account of high prices and low arrivals are likely to re-enter the market and prices could firm up further.
Kochi April 27
A faster than expected global economic recovery and the resultant acceleration in demand for natural rubber are likely to dominate sentiments in the global rubber markets in the short to medium-term. Also, global demand is likely to receive a further boost as a section of tyre manufacturing industry which stayed away during the wintering months are expected to re-enter expecting better availability in the coming months, the Association of Natural Rubber Producing Countries (ANRPC) has said.
Over 45 per cent of the global demand for rubber comes from China, India and Malaysia. The data on import and consumption of rubber in these countries during the first quarter this year reveal that natural rubber has already entered into a demand-driven bullish phase. While consumption in India rose 12.8 per cent, imports have soared by 124 per cent. More demand is expected in the months to come as the installed capacity to manufacture bus and truck tyres is poised to more than double, the Automotive Tyre Manufactures Association has pointed out.
“The likelihood of prices slipping this year is quite remote. In fact, as demand firms up in the months to come, prices are likely to improve further in the coming days.
Indications are that global spot prices could breach the $4-mark in the not-too-distant future” said Mr N. Radhakrishnan, former President of the Cochin Rubber Merchants Association.
Consumption in China increased 29 per cent during the first quarter, while natural rubber imports soared 70 per cent. Malaysia has posted 13 per cent growth in consumption, while imports rose 28 per cent.
Like India, Malaysia is also fast becoming a net importer of natural rubber. Preliminary indications are that Malaysia imported 1,83,000 tonnes of rubber in first quarter.
In the days to come, Malaysian demand is likely to be fuelled by greater demand from the domestic glove industry as the US has stepped up its health bill by $ 940 billion.
Global production
Even as consumption and imports into the major-consuming countries have registered double-digit growth, global production is expected to rise moderately by 6.2 per cent during the current year, the ANRPC that accounts for 94 per cent of the global production and supply of natural rubber said. However, this is better than the 3.6 per cent fall recorded last year.
Global production is expected to rise modestly from 8.821 million tonnes (mt) in 2009 to 9.367 mt in 2010. Most countries, including India, expect a moderate increase in production, while Malaysia alone expects production to grow faster by 16 per cent. Increased production is expected from growth in yielding area under rubber. Yielding area in India is expected to go up by 6,000 hectares, while China is expected to record a growth of 22,000 hectares, Vietnam (23,000 hectares) and Cambodia (10,000 hectares).
Labour shortage is not only becoming rampant in the growing regions of South India but is also extending to countries such as Malaysia. ANRPC reported that 85,000 hectares of mature rubber area which are lying untapped in Malaysia are now being tapped as prices have risen to all-time highs.
Although availability usually improves in April after the winter dormancy, the Association pointed out that it could be different this year. As prices have remained high, farmers have not been cutting down old trees and replanting with improved varieties in recent years and this is likely to affect the yield this year as well.
Limited options
Moreover, farmers have limited options of increasing yield as high prices had ensured that they extracted the maximum yield from their trees. Finally, consumers who have stayed away from the market in the past couple of months on account of high prices and low arrivals are likely to re-enter the market and prices could firm up further.
(thehindubusinessline.com)
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