Global rubber supply could be below forecast

Written by M Sarita Varma | Thiruvananthapuram | Updated: Oct 29 2010, 19:00pm hrs
Global supply of natural rubber is a tad worse than what has been earlier predicted by the Association of Natural Rubber Producing Countries (ANRPC), a conglomerate of major rubber producing nations. The association said that global natural rubber supply may grow at just 5.3%, compared to 6.3% that had been projected last month.

Even 1.4% growth anticipated for Q4 is unlikely to be attained. Thus even the 5.3% output growth anticipated for 2010 is optimistic, Prof. Dr. Djoko Said Damardjati, secretary general, ANRPC said in its latest monthly bulletin. A further downward revision cannot be ruled out, he added. The average annual growth in rubber production from 2007 to 10 was only 0.5%, Jom Jacob, Senior Economist ANRPC said.

There is little chance of better supply situation next year too. But the yielding area is likely to expand by 2012. By then some of the trees planted from 2005 could start yielding latex, he told FE.

Meanwhile, China has started procuring huge quantities of rubber of fears of supply falling short in future. Chinas natural rubber import is projected to rise by 41.5% in fourth quarter of 2010 as compared to the previous year. China has cut its natural rubber production estimate of 2010 by 0.3% because of early winter. China, India and Malaysia together account for 47% of the global demand for rubber.

Also, unseasonal heavy rains in October have affected rubber output in India and Thailand, ANRPC said, pointing out that Malaysia too was in similar plight and its (ANRPCs) earlier estimates had not factored it in.

India has scaled down rubber supply expected for this year to 844,000 tonne, from an earlier forecast of 879,000 tonne. The supply is anticipated to grow at a much slower rate of 2.9% only as against 7.2% anticipated earlier.

On the natural rubber market, ANRPC feels that strong currencies in rubber exporting countries could prop up prices , despite negative influence of yen. Rubber prices have gained from appreciation of Thai baht and Malaysian ringgit (during July to October) and the appreciation of Indonesian ruppiah.