Rub­ber Bub­ble

Enterprise - - World view -

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

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