Natural rubber could be the ultimate bubble if its price keeps rallying at current rates, the Thai Rubber Association has warned. “Demand for rubber is now stronger than gold,” said Luckchai Kittipol, the association’s president.
Last year, the price of natural of global production. India is another big producer, but it is also the fourth largest consumer of natural rubber.
The US, China and Japan dominate global rubber consumption, collectively accounting for more than half of the market in 2011. China is estimated to consume 3.5 million tonnes of natural rubber in 2011, followed by the US with 900,000 to 1.1 million tonnes
World rubber consumption is forecast to increase 4.0 % annually to 26.5 million MT in 2011.
China is the leading consumer of rubber worldwide, following more than a decade of strong growth in motor vehicle production and industrial goods manufacturing. Demand from rubber rose about 80 per cent with an average of Bt106 per kilogram (US$3,600 a tonne). Heavy rainfall in top natural rubber producing nations including Thailand and India had triggered a spike in the prices of natural rubber last year.
“Thailand has been slowing down natural rubber sales, while China is speeding up purchases to keep it in factories,” he said. This situation could drive up natural rubber prices.
Natural rubber is produced primarily in three countries — Thailand, Indonesia and Malaysia. Together, they account for about 94% China is expected to soar 35% to 6.83 million MT by 2010, according to the China Rubber Industry Association.
The rubber industry is very sensitive as the price of rubber is constantly changing and any economic decline or rise affects the industry to a large extent.
Last year, prices of commodities, especially rubber and precious metals like gold and silver, surged due partly to the shift of global investors to seek higher-yielding assets elsewhere after the US dollar had been weakening