JAKARTA – Natural Rubber is expected to move from deficit to surplus in 2012, which would put downward pressure on prices.
The global surplus rubber is estimated at 413,000 tonnes in 2012 from 87,000 tonne shortage in 2011, slowing growth in China may add to bearish trend.
According to Goldman Sachs Group Inc, global supply will increase 7% to 11.8 million tonne, while demand rises 3% to 11.4 million tonnes in 2012, reported Bloomberg.
Even though the demand from the automotive sector is high, the prices are likely to stay under pressure. The rubber prices is linked to global and Chinese economic growth as China is the largest automakers.
Presently, the growth in Chinese economy has slowed down, affecting the price of the commodity.
Recent natural disasters in Japan and in Thailand has also affected the price of the rubber due to disruption in automobile production.
The Rubber in Tokyo Commodity Exchange (TOCOM) fell 50% to 267.8 from all time high of 535.7 yen on 18 February 2011.
The production in Thailand may rise to 8% to 3.7 million tonnes in 2012 and in Indonesia, the production is expected to be 5.1% higher to 3.1 million tonness as supply in Malaysia remains little changed at 1 million tonnes. The three countries account for 70% of global production.
The slump in rubber prices is good news for major tyre makers like Bridgestone, Michelin, and Fabrice Lenica.
Demand for tyres may also be reinforced by the expanding global sales of cars and light commercial vehicles, which is likely to advance to 6.7% to a record 77.7 million units 2012.
But the concern about Europe’s debt crisis and slowing growth in China is expected to keep rubber prices under pressure.
Source: Surplus production to put pressure on natural rubber prices in 2012