KUALA LUMPUR (July 1, 2010)—Aging trees and unstable climatic conditions will hamper short-term efforts to increase natural rubber supplies, according to the latest projections from the Association of Natural Rubber Producing Countries.
However, global economic recovery plus favorable movement in Asian currencies will keep NR demand high, ensuring high prices in the short and middle term, the ANRPC said in the latest issue of its newsletter, Natural Rubber Trends & Statistics.
NR production for 2010 should total 9,384,000 metric tons worldwide in 2010, up 5.2 percent from the 2009 production level of 8,920,000 metric tons, the ANRPC said. The organization anticipated a 6.3-percent growth rate in March 2010, but that was always an optimistic projection because of the age of existing trees—most of which were planted in the 1980s—and unfavorable climate patterns, it said.
Nevertheless, the organization is still projecting increased production this year, after a 3.6-percent drop in 2009. NR production in 2009 stood at 9,253,000 metric tons.
Meanwhile, economic concerns are easing in commodity markets, according to the ANRPC.
“There is an increasing optimism that the potential threat of Greek debt crisis might not undermine the global recovery,” the association said in its newsletter. “The outcome of the just-concluded G-20 summit strengthens this view further.”
China's recent decision to end the yuan's two-year peg to the U.S. dollar also looks favorable for NR demand, the ANRPC said.
The yuan should strengthen gradually against the dollar, the association said. “A stronger yuan, while making exports less competitive, helps in making imports less expensive, thereby promoting more import of raw materials,” it said. “Natural rubber could gain from China's potential higher import demand arising from a stronger yuan.”
China increased its NR consumption 28 percent to 1,421,000 metric tons in January-May 2010, and its NR imports 13.7 percent during the period to 1,117,000 metric tons, the association said.