LONDON (July 30)—The price for natural rubber is likely to fall slightly this year and next as the threat of recessions in the U.S. and other industrialized nations overshadows concern over potential supply shortages, according to the Economist Intelligence Unit, a market forecaster. In addition, a cartel being formed by the main rubber-producing countries to improve pricing "is destined to fail," the EIU said in its latest world commodity forecasts. Despite the global economic slowdown, the EIU said the market is facing the lowest level of stock cover since the 1995 boom in rubber prices. The balance will shift further in favor of sellers through 2003, said the group, repeating a warning made in previous commodity reports. Global demand levels of 7.34 million metric tons, 7.51 million tons and 7.69 million tons in the years 2001-3, will outstrip supply by up to 300 kilotons per year over the next two years, according to the EIU. Stocks of natural rubber likewise will fall to 9 weeks' consumption from 14 weeks' consumption this year, it said. Current negative market sentiment means the EIU indicator price for rubber will fall by 1.5 percent next year to $745 per metric ton, after a 9.2-percent fall between 2000 and 2001, the London-based group said. Meanwhile, a plan by Thailand, Malaysia and Indonesia to improve prices by holding rubber off the market will prove too costly, because stocks are expensive to maintain, the EIU report said.
EIU forecasts natural rubber prices to fall in 2001, 2002
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