QINGDAO, China—Low natural rubber prices, caused by factors including oil prices, lower demand than forecast and weak global equity market, may lead to a slowdown in new plantations and replanting and tighten supplies from 2020 and beyond.
“The reported large stock overhang is only on paper,” Sheela Thomas, Association of Natural Rubber Producing Countries secretary general, said during her speech at the 2016 China Rubber Conference in Qingdao.
The China factor is not to be overlooked, either, said Thomas. The country accounts for 40 percent of global natural rubber consumption, and imports 80 percent of what it consumes.
Its various economic situations and rubber policies, such as the depreciation of Yuan and the new tariff policy on compound rubber that curbs imports, hold strong influence over the global industry.
Last year global natural rubber production dropped slightly to 11.8 million tons, lower than global consumption pegged at 11.9 million tons.
“Farmers find it very hard to justify production,” said Thomas. “They are looking to the government for solutions.”