Sharp rise in natural rubber prices

In the Sri Lankan newspaper The Sunday Times Online, Dr Tillekeratne of the Dept of Chemistry at Sri Jayawardenepura University reports on the market situation for natural rubber. All grades of natural rubber are currently fetching very attractive prices, over US$ 2.50 per kilogram (Rs 260/kg) – a sharp rise from only RS 40/kg in 2004. Moreover, the International Rubber Study Group (IRSG) has predicted high and stable prices for the coming years.

Due to low rubber prices in the past years, some of the plantations and smallholders in Sri Lanka have since diversified their lands to other crops; mainly to tea, or have stopped maintaining their plantations. The replanting rate today is below demand even with extended subsidies currently paid for replanting by Sri Lankas Rubber Development Department.

In his article, Dr Tillekeratne aims to motivate producers to invest in replanting rubber plantations. To this end, he cites figures given by the Secretary General of the IRSG at the International Rubber Research and Development Board (IRRDB) symposium held in Cambodia in November 2007. In 2006, China consumed nearly 25% of the total world natural rubber consumption, while USA consumed only half of that – 13% of the total. Japan consumed 9.5% of the total while India consumed 5%.

With the rising price for natural rubber on the world market and in the light of an expected shortfall of supply, all major tyre producers are now taking steps to minimize natural rubber usage in tyres. In order to do that, they have designed wheels with spokes for cars where the rubber requirement is minimal. Further, they are trying to increase the longevity of the tyres to 100,000 km. Increasing the ability to rebuild tyres at least four times by strengthening the carcass of tyres is another strategy to minimize natural rubber usage in tyres.

According to predictions of the International Monetary Fund (IMF), the major natural rubber consumer by 2020 would still be China consuming 33% of the world consumption while USA will consume 7.7%. With the latest developments in India to date, their consumption by 2020 would be 7.5% . Based on these figures, total consumption in the world would be about 13.5 million tons with the total productionimg remain at 13.1 million t leaving a shortfall of 0.4 million t. But the deficit of NR production predicted in 2005 was 3 million tons. The total synthetic and natural rubber usage by 2020 would be about 31.3 million tons, thereby maintaining the 43.3% natural rubber consumption by 2020 too.

Further information
Sharp rise in natural rubber prices, The Sunday Times Online, 2008-02-03.

(Cf. news of 2007-10-16 and 2006-07-10 and price index natural rubber.)

Source

The Sunday Times Online, 2008-02-03.

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