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Concerns over the global output of natural rubber in 2014, amid the tense political situation in Thailand, have pushed up international prices of the commodity. Thailand is the world’s largest producer. Prices are expected to be firm in the short run.
The Association of Natural Rubber Producing Countries (ANRPC) reported unfavourable weather could lead to a lower-than-expected supply growth in 2013. The supply crunch has pushed up the price of RSS-3 grade in the Bangkok market Rs 6/kg in three weeks. TOCOM futures moved steadily for January and February contracts. But the longer contracts moved slightly negatively.
Global demand is set to recover in 2014 and 2015, driven by demand from China, India and Japan, according to a report from the Economist Intelligence Unit, based in London. The demand will rise four per cent in 2014 and 2015, it said last week. Contrary to earlier projections, prices are likely to be firm during this month and the first quarter of 2014.
Indonesia, world’s second largest producer has planned to cut output next year by 10%, while urging other Southeast Asia rubber-growing countries to do the same to reduce global stocks and support prices. Indonesian Rubber Association has recently issued a letter to its members to reduce production by 10% in next year.
Indonesia’s 2013 rubber output will be little-changed at 3.1 million tones with gains hampered by wet weather and curtailed by an earlier agreement with fellow producers Thailand and Malaysia to trim exports. Indonesia, Thailand and Malaysia account for about 70% of world output, with major tyre makers that include Bridgestone Corp, Michelin and Goodyear Tire & Rubber Co taking most of their output.
Indonesia has asked Thailand, Malaysia, Vietnam, Laos and Cambodia, world’s leading producing countries to join them in the output cuts for next year. Meanwhile Vietnam, the world’s third-largest natural rubber exporter after Thailand and Indonesia, aims to keep its rubber output next year unchanged at around 1 million tones.
Global rubber prices now advanced to a two-month high as better-than-expected Chinese manufacturing data raised speculation that demand will increase from the largest consumer, and as violence inThailand stoked supply concerns.
Data released on Tuesday noted that Chinese manufacturing growth beat analyst estimates in November, indicating the nation’s economic recovery is sustaining momentum amid government efforts to rein in credit growth. According to experts if China’s import increases price might be firm during the first quarter of next year.
