Global supply to stay tight

Global natural rubber supply is likely to stay tight in 2008 despite the forecast of higher output from a year ago, an industry official said on Tuesday.

Although International Rubber Study Group, an inter-governmental body in the rubber industry, has projected global output to touch 10.20 million tonnes in 2008 compared with consumption of 9.88 million tonnes, the tight supply situation may not ease, he said.

According to IRSG, global rubber output is likely to stay higher compared with consumption in 2009 as well as in 2010.

Output in 2009 is projected at 10.56 million tonnes against consumption of 10.31 million tonnes, while in 2010 production is slated to touch 10.98 million tonnes and consumption at 10.80 million tonnes.

High price of crude oil and enhanced holding capacity of rubber growers are likely keep supply tight, said an official of Rubber Board who preferred to remain anonymous.

Price of synthetic rubber, derived from petroleum products, is unlikely to come down when crude oil is staying above $100 a barrel, he said.

Growers are also having more economic strength to hold back stock because of rise in rubber prices during the last two years, he said. Income of growers in other major rubber-growing countries like Thailand, Indonesia and Malaysia also improved, he said.

According to IRSG, global rubber output in 2007 remained little changed at 9.685 million tonnes compared with 9.68 million tonnes in the previous year.

Consumption, however, rose to 9.71 million tonnes from 9.21 million tonnes during this period.

Output in major producing countries such as Thailand, Malaysia and India declined in 2007, according to IRSG estimates.

In Thailand, the world's leading producer of natural rubber, output slipped to 2.97 million tonnes in 2007 from 3.13 million tonnes, while in Malaysia production fell to 1.21 million tonnes from 1.28 million tonnes.

Indonesia is the only major rubber-producing country that registered a rise in output to 2.79 million tonnes in 2007 from 2.63 million tonnes in the previous year.