ASEAN KEY DESTINATIONS
Thai rubber supply tight
The growing automobile sector - especially in countries such as China and India - has accelerated demand for tires.
However, the globalnatural rubber supply is likely to remain tight for the next two years due to a lower yield from major producing countries such as Thailand.
The Association of Natural Rubber Producing Countries (ANRPC) estimated natural rubber supply increased by 6.3 percent to touch 9.4 million tonnes during 2010, but expects a drop in production from Thailand this year due to an extended winter and unpredictable rains. Production in Indonesia also dropped for this harvest due to unusual rains.
Still, the global rubber supply in 2011 is expected to equal last year's total due to the chance of increased output in many major growing countries, said Jom Jacob, senior economist at the ANRPC.
Thailand is planning to reduce its rubber plantations by 815,000 hectares in the South to grow oil palm trees. It will expand rubber plantations in the North and Northeast by 870,000 hectares. A shift in the supply curve is expected from 2012 due to the new planting areas reaching the yielding stage, said Mr. Jacob.
He expects the impact of supply from such a large area to be partly offset by uprooting of old rubber trees in all major producing countries.
Labour availability and climate are the two main risk factors for rubber supply. Delay in replanting due to current high prices and crop expansion in non-traditional areas where yield will be lower are factors to watch out for in the near future, said ANRPC secretary-general Djoko S. Damardjati.
Inappropriate planning for synthetic rubber production is also making the situation tight, said Stephen Evans, the secretary-general of the International Rubber Study Group (IRSG). Globally, a shortfall is being reported in the production of butadiene, an important industrial chemical used as a monomer in the production of synthetic rubber.
India imports more than 80 percent of its synthetic rubber. The Rubber Board of India reported the share of natural rubber in automobile tires is 73 percent and synthetic only 27 percent. Globally, synthetic rubber averages 56 percent composition in tires against 44 percent natural rubber.
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