GUANGDONG, China—An international rubber group forecasts that both natural rubber and synthetic rubber will have an abundant supply in the years to come.
Stephen Evans, secretary general of International Rubber Study Group said that by the year 2020, there will be a surplus of 1 million tons of natural rubber and 3 million tons of synthetic rubber.
Global consumption of natural and synthetic rubber, pegged at 12.3 and 16.8 million tons, respectively, in 2015, has will increase 3.1 percent and 0.9 percent from 2014. It is projected to reach 15 and 19.4 million ton by 2020.
“Lack of economic growth is one reason for the under-consumption,” Evans said at the 2015 China Rubber Conference in Guangzhou. “Recovery from the financial crisis has not fully happened.”
He added: “If crude oil prices stayed down, it would add some stimulus,” increasing total global rubber consumption by 0.5 million tons by 2020.
Evans also raised concerns about upstream and downstream challenges. For producers, those challenges include farmers' financial reward and lack of inward investment for natural rubber, and inadequate competitive chemical feedstock supply and bio-sourcing for synthetic rubber.
Problems facing consumers include stable prices, raw material recovery from end of life rubber products, and legislation to encourage innovation ability down the value chain.
Besides capacity and planted area expansion, Evans believes excess natural rubber inventory in both producing and consuming countries has an impact on the industry in the shorter term, while longer term factors include recycling, shale gas access in China, climate change and competition for labor and land in Southeast Asia.
Evans believes with limited local natural supply in major consumer countries—China and India—and new synthetic rubber capacity expansion in both countries, synthetic rubber may become the strategic product of choice.