A new report by Smart Research assesses the state of rubber production in Asian countries.
The global market is currently in its fourth year of surplus of natural rubber. The excess supply situation has caused stocks to pile high and prices are falling steadily. It is expected that global surplus by the year 2020 will be approximately 1 million tons of natural rubber and 3 million tons of synthetic rubber.
World demand for natural rubber, which is primarily used to manufacture tyres, is cooling down due to the economic downturn in China. Asia accounts for 93% of the world natural rubber production with Thailand being the largest producer followed by Indonesia and Vietnam. Other large rubber producers in the region include India, China and Malaysia.
China is the world’s largest consumer of natural rubber followed by India and the United States. Increasing consumption of tyres and industrial rubber products is expected to boost the global demand for natural rubbers. Indonesia is the second largest rubber producer globally behind Thailand. While the industry is faced with challenges such as low production and poor infrastructure, growing rubber demand from developing economies is expected to boost the market in 2015.
Indonesia is the second largest natural rubber producer globally. The industry is currently experiencing oversupply with demand having slowed down particularly from China which is the largest buyer of rubber in the world. Actively supporting the sector, the International Rubber Consortium, which is a body representing rubber producers Thailand, Indonesia and Malaysia, has recently recommended the commodity not be sold at the current low prices.
Natural rubber production in Malaysia has been falling for the past few years. Many factors such as extreme weather and smallholders shifting to palm oil production are responsible for this. More than 60% of the natural rubber in the country is produced by smallholders who have not been finding the sector lucrative due to the falling prices.
Thailand is the world’s largest producer and exporter of natural rubber. The sector is currently faced with lack of demand and large stock piles. This is primarily due to a fall in demand from China which is the world’s largest rubber consumer. Rubber prices have fallen approximately 30% in 2014 and rubber producers are seeing a fall in revenue. Globally Vietnam ranks third in natural rubber production behind Thailand and Indonesia. Vietnam rubber production accounts for approximately 8% of the global output and more than 80% of the production is exported to 86 countries. China is the largest market for Vietnam’s rubber exports