ACCORDING to market analysts, a current rubber surplus is prolonging the bear market that began in April, with supply exceeding demand for a third year and Southeast Asian exporters ended curbs on shipments.
Surplus will mount to 57% to 490,000 metric tonnes this year, which could cover US demand for six months, according to Singapore-based RCMA Commodities Asia Group.
The increasing global car production triggering rising demand for tyres does not curb the glut caused by farmers expanding output by 18% in three years after prices more than doubled since the end of 2008, says a report.
“There isn’t enough demand out there to absorb the surplus,” said Kazuhiko Saito, the chief analyst at Fujitomi Co. in Tokyo, who also cautioned against an influx of rubber “unless governments intervene as production from Southeast Asia moves into high gear.”