Rubber prices are exploding
By Purchasing Staff -- Purchasing, 10/10/2005 6:00:00 AM
Natural rubber prices in Southeast Asia could increase by as 46% in 2005, according to analysts who reckon that supply has been limited in most producing countries. At the same time, economists say high oil prices will boost the annual average price of synthetic rubber—adding to the inflation already impacting tires and gloves.
The price of Thai ribbed, smoked sheet, grade 3 rubber (sold as RSS3) already has risen more than 40% since the beginning of 2005 to around $1.70/kg now from $1.20 then. Consumption is rising amid increased demand from tire makers in the U.S, China, Japan and India. According to the International Rubber Study Group, global consumption of natural and synthetic rubber together is expected at 20.74 million metric tons in 2005 from 20.3 million in 2004. However, supply isn’t keeping pace. Various wire services report that Thai natural rubber output in 2005 is expected to be around 2.97 million metric tons, down from 3.01 million metric tons in 2004, according to data from the country's Agriculture and Cooperatives Ministry. Production in Malaysia, the third biggest producer in the world, also looks set to fall in 2005. Malaysia's rubber output is expected to fall 2% to 1.14 million metric tons this year, the government said in an annual economic report published last Friday. The decline has been attributed to a reduction in plantation acreage. Indonesia, the second-largest producer of the commodity, however may see a slight rise in output to 2.25 million metric tons this year, up from 2.07 million metric tons in 2004, according to the Indonesian Rubber Association.
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