Natural Rubber output to exceed its demand by 4X International
As the economy in one of the largest buyer of new cars inform of China shows the signs of slowing down, the demand for natural rubber, which is mostly used in manufacturing of tyres is also falling. While the supplies for natural rubber are expanding after a decade long rally in prices, most notably in Year 2011, encouraged the top producers of natural rubber to plant more trees, it is estimated that the output will exceed the use of natural product for two more years. According to The Rubber Economist, a London based rubber industry researcher, by end of 2016 the surplus for natural rubber will be Four Times than that of its demand.
The global benchmark for rubber trading, I;e, Tokyo is down by 70% from what was a record in year 2011. The lowest in six years registering USD 1.28/Kilogram. The export price from Thailand has seen a fall of close to 23% in 2015 whereas Futures in Shanghai slumped by 22%.
According to the report the global production of Natural rubber is all set to exceed its demand by close to 4 lakh tonnes in 2016 & by 4.3 lakh tonnes in 2017. It is quite noteworthy that in year 2015 the surplus was of around 98,000 tonnes only.
Whereas there are doubts on the increase of consumption of natural rubber in coming years the production is expected to rise by 3.8% by year 2017 & will carry on with the rise in year 2018. It is estimated that the output of natural rubber will increase to approximately 13M tonnes by year 2017.
The consumption however, will only see a rise of 3.7M tonnes if the reports by The Rubber Economist are to be believed.