Just think where the world will be in 18 months.
The new U.S. president will have been in office eight months, and the candidates to replace him or her will be lining up for the 2012 election. LeBron James will have at least one MVP trophy on his mantel and American Idol will have crowned two more kings or queens.
And rubber processors finally may see a decline in natural rubber prices, according to a top NR trader. Or will they?
Today the cost of NR is beyond anything seen in...well, ever. The average price F.O.B. has been $1.16 a pound this year. Compare that with the budget-breaking 97 cents a pound average of 2007.
Just eight years ago, Hevea rubber hit an all-time low of 23 cents. But the typical price, historically, has been in the 50-cent range. Oh, if it only would settle there again, rubber processors wistfully say.
Not very likely, for several reasons.
The world is hog-tied to oil, and not about to get loose. While natural rubber has no direct connection with oil, it does compete with oil-based rubbers, particularly the workhorse SBR. Not only are American oil company executives ordering new yachts and oil-state sheiks adding to their BMW collections thanks to $110-a-barrel oil, a cutback in feedstock availability-butadiene, in particular-has helped drive up the cost of synthetic rubbers.
Price hikes, of course, helped by the unquenchable thirst for all things material from China.
You'd think if the U.S. economy improves-one can always hope-NR prices could start to come down a bit. There are other worries for the long run, though.
Whitney Luckett, the expert in the field from rubber trader RCMA Americas Inc. who opined that prices could fall in 18 months, also reported workers in Indonesia and India are overtapping Hevea trees. That guarantees the trees won't survive the expected 25-year lifespan-maybe even halving it.
This comes on the heels of predictions by NR experts in the past couple of years that by 2010, worldwide demand for the rubber will outstrip supply.
By then, just two years away, NR at $1.16 a pound may be a bargain.