Natural rubber demand may grow 4.6 percent this year, boosted by strong vehicle sales, with consumption continuing to outpace supply in coming years, according to the International Rubber Study Group.
Global consumption may gain to 11.2 million metric tons in 2011 and 11.6 million tons next year, said Stephen Evans, the group’s secretary general. The supply deficit will support prices of the commodity used to make tires and gloves, he said.
Rubber gained to a record this week, extending a 50 percent advance in 2010, as rising car sales led by China and India boost demand, and rains disrupted tapping in key growing nations ofSoutheast Asia. Natural rubber demand in China, the biggest consumer, may rise 9 percent this year, said the Association of Natural Rubber Producing Countries.
“From the fundamental point of view, we don’t see relief coming in the next few years because of over-demand and undersupply,” said Evans. “The price is likely to stay firm,” he said.
Demand may rise further to 13.1 million tons in 2015 and 15.4 million tons in 2020, while production may be about 13.8 million tons, said Evans. The estimates are based on normal production conditions, excluding a potential increase in supply from new plantings and increased tapping driven by high prices, he said.
Above-average rain from a La Nina weather event has curbed output in Indonesia, Malaysiaand Thailand, the biggest producer. The weather pattern may last until the middle of the year, causing higher-than-usual rainfall in Thailand during January to April, the Thai Meteorological Department has said.
Further Tightness
“If the demand stays strong, we’ll see further tightness in the market,” Evans said. Still, it isn’t “worrisome, as high prices will encourage tappers,” he said.
The most-active contract on the Tokyo Commodity Exchange gained as much as 3.2 percent today to 474.8 yen per kilogram ($5,725 a ton).
Futures fell 4.6 percent in the past two days after reaching a record 484.9 yen on Jan. 24 on worries China may take additional steps to curb inflation, reducing demand. China raisedinterest rates twice in the fourth quarter in a bid to choke off inflation.
“In the fast-moving economy like China, even a significant move may not be enough to slow it down,” Evans said. “There is no fundamental evidence that demand will go off a cliff.”
Natural rubber consumption in China may rise to 3.6 million tons this year and India’s consumption may gain 5.2 percent to 991,000 tons, according to the Association of Natural Rubber Producing Countries.
China Growth
China’s economy grew 10.3 percent in 2010, the fastest pace in three years and up from 9.2 percent a year earlier, the government said this month. China’s vehicle sales may grow 10 percent to 15 percent this year after jumping 32 percent to 18.06 million vehicles in 2010, according to a forecast by the China Association of Automobile Manufacturers.
Natural-rubber supply from members of the Association of Natural Rubber Producing Countries, which represent 92 percent of global supply, may expand 4.8 percent this year to about 9.9 million tons, the group said Jan. 25. The forecast is lower than an “optimistic target” by member governments of 7.7 percent growth to 10.2 million tons, it said.
The International Rubber Study Group counts 16 countries plus the European Union as members, according to its website. Thailand and Malaysia, the world’s largest and third-largest producers, are part of the group, while Indonesia, the second- largest grower, is not.
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