PUTEAUX, France-Contrasting realities exist in the natural rubber market as NR producer and consumer nations prepare to meet in Geneva late this month to negotiate a new international agreement. NR prices have regained strength in the first two months of 1994. However, the International Natural Rubber Organization holds a huge amount of Hevea rubber in its buffer stock, purchased and taken off the market to support prices. And unresolved differences between consumer and producer nations remain over the reference price, which triggers NR purchases or sales.
With NR consumption in 1993 an estimated 2.2 percent shy of production, the excess of about 125,000 metric tons was absorbed by the INRO buffer stock and various national governments in producing lands, according to trader Safic-Alcan S.A.
The buffer stock's intervention in the market came primarily in the last few weeks of the year. The earlier impasse between consumer and producer nations prevented the buffer stock manager from taking any action for more than six months, Safic-Alcan said in a recently published review of the year's activities.
Partially as a result of the buffer stock's inability to act, the reference price for NR fell in late September to its lowest point in eight years, 156.3 Malaysian/Singapore cents.
Since then, however, the price has recovered because of a combination of buffer stock buying and demand rebound. In mid-February, spot prices were fluctuating in the 210-225 cents range.
NR use will remain under pressure from synthetic rubber throughout 1994, Safic-Alcan forecasts, because of low oil prices and inexpensive SR from former Soviet Union sources.
Thailand, Indonesia and Malaysia remained the ``Big 3'' NR producers in 1993, accounting for nearly 75 percent of the 5.58 million tons produced last year, according to Safic-Alcan estimates.
India and China were the big gainers last year, increasing output 8.6 and 6.5 percent, respectively. However, most of the NR produced in these countries is consumed domestically and therefore has little effect on world prices.
Global consumption of NR increased 0.3 percent in 1993, Safic-Alcan estimates, but use varied widely country by country. Consumption in the U.S., for example, rose 7.2 percent, while German consumers bought 15.5 percent less NR than in 1992.
Overall European consumption fell 6.6 percent to 1.02 million tons, with only the United Kingdom showing an increase (up 1.6 percent). Japanese demand slipped 8.2 percent.