Global natural rubber firm on tight supplies .

Kochi, March 26 Global natural rubber prices continue to remain firm mainly on account of a sharp spurt in demand and heightened imports by China, India and Malaysia.

Preliminary estimates of import and consumption of rubber in January and February by the Association of Natural Rubber Producing Countries (ANRPC) reveal substantial growth over the previous year.

Figures released by the ANRPC show that imports by China surged 63 per cent for natural rubber and 118 per cent for compound rubber in the first two months of this year. And, more than 95 per cent of the imported compound rubber consists of natural rubber.

In Malaysia, natural rubber import rose 34 per cent. During the same period, India posted a 17 per cent growth in consumption of natural rubber and over 100 per cent growth in imports. The ANRPC also pointed out that large scale capacity addition taking place in the Indian auto tyre industry indicate the possibility of a further acceleration in natural rubber demand.

More than 45 per cent of the global consumption of natural rubber is from China, India and Malaysia. While these three are major consuming countries in the ANRPC, China and India are considered the pace setters of global demand and price trends.

Optimistic estimates

While member countries of ANRPC account for over 94 per cent of global rubber production, estimates provided by their governments indicate that the current year's production is expected to surge by six per cent. And even this estimate can be termed optimistic since the forecasts are based on favourable weather conditions prevailing over much of the rubber growing belts of the world. Already, reports of moisture stress and drought-like conditions emanate from Thailand and China that could undermine output expectations.

The ANRPC also reported that a 16.8 per cent rise in output estimate by Malaysia is also on the optimistic side given the progressive decline in tapped area during the past six years. A large extent of existing yielding trees in all major producing countries were planted during the eighties and they have now reached the declining phase in production. Therefore, the ANRPC said that the age of composition of the existing yielding area is quite unfavourable for an improvement in yield.

The buoyant demand, uncertainty in supply, weaker dollar and rise in crude oil prices have been supporting natural rubber prices. In addition, the fall in the Japanese yen since March 7 have also been supportive to the natural rubber markets. Natural rubber prices firmed up in all major global markets in Kuala Lumpur, Bangkok, Singapore and Kottayam during the second week of this month.

Source : Business Line