Growth in global rubber output seen muted

C.J. Punnathara

Kochi, June 30

The Association of Natural Rubber Producing Countries (ANRPC) has lowered the growth forecast in global rubber production from 6.3 per cent to 5.2 per cent for 2010.

The prime reason attributed for the lower production is because large areas of rubber trees which were planted in 1980s are expected to become less productive and senile.

Also, the weather conditions are expected to be less than favourable in several rubber growing regions of the world during the current year. Demand for rubber is expected to pick up worldwide as the global economic recovery is reportedly gaining pace. As a result, demand for automobiles, especially from the Asian region, is expected to rise sharply in the coming months.

The firm price trends are expected to be sustained into the coming months. These are not happy tidings for the rubber industry which has had to absorb increased raw material costs.

Meanwhile, rubber is not available in the domestic markets even at Rs 183 today, Mr N. Radhakrishnan, former President of the Cochin Rubber Merchants Association, said. After a respite of a single day, futures prices have also moved up.

The Indian government should permit limited rubber imports at lower duty. Or else, the Chinese might import all the rubber from the global markets and India tyre industry may not have sufficient quantity of this vital raw material, he added. Also, deviating from the normal trend observed year after year, the global supply of natural rubber continued to be tight into June this year.

Under normal conditions, supply from all major producing countries usually eases up from April as farmers resume harvesting after the winter rest for the trees, the ANRPC said.

Chinese contribution

To compound the demand-supply deficit, China, which was largely staying away from the market in April/May has re-entered the market as a big buyer in June, resulting in the prices remaining firm. The firm trends in the global commodity markets have been backed by partial float and strengthening of Chinese Yuan and the perception that the global economic recovery is gaining pace.

China accounted for close to 37 per cent of the global rubber demand in 2009. Meanwhile production shortfalls are being reported from several countries on account of adverse weather conditions.

There have been reports that Indonesia's output in June has been affected by continued and unusual rains. Thailand's production fell by 13.3 per cent in April on account of extended wintering.

(thehindubusinessline.com)