Unless there are some dramatic changes, rubber processors that use natural rubber will face a shortage around 2010. They now have a couple of options:
a) be Bridgestone, which owns the world's largest NR plantation, in Liberia.
b) be Goodyear, and have your large technical staff find ways to cut your NR use; or
c) do nothing now, panic later.
Not every company can own its own Hevea rubber plantation, or assign a big cadre of sharp minds to reduce NR consumption. But every company can prepare in some ways, and avoid future consternation.
The supply and demand equation for NR is expected to tilt toward shortage for several reasons, according to industry participants. Demand for the product continues to grow, particularly in China, but also in India. Don't expect it to stop.
Meanwhile, the effort to plant more Hevea trees, and the success in doing that, isn't going as well as it should be. It's fortunate that some smaller players in the NR-producing business are growing and, at least today, there is a significant stockpile of the material. But without some dramatic change in planting, substation or demand, a shortfall is destined to occur.
Shortage means higher prices, just a fact of life in business. But NR has a couple of its own characteristics that can make pricing volatile: the NR trade is subject to speculation, and there has been instability, economically and politically, in some NR-producing countries.
Add that together and a scenario of $1 a pound for NR isn't just a fantasy. Did anyone five years ago predict $60 for a barrel of oil?
The big companies are aware of the possibility, and taking steps to ensure a change in the NR market doesn't cripple them. Smaller processors should, to the best of their ability, follow that lead.