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Rubber Journal Asia Latex Industry

Asia cultivates an efficient rubber production The region’s rubber sector has a blueprint of strategies to hedge it against falling prices

and struggling output, says Angelica Buan in this report.

Prices under the weather orld demand for rubber has outpaced production, according to the latest Trends & Statistics released by the Association of Natural Rubber Producing Countries (ANRPC). This is not unprecedented as rubber is one market commodity that fluctuates more often than is stable. “During January 2017 to September 2017, the world output of natural rubber (NR) stood at 9.240 million tonnes while world demand of NR accounted for 9.637 million tonnes. As a result, a shortfall in world supply reported close to 400,000 during this period,” ANRPC’s Secretary General Dr Nguyen Ngoc Bich stated recently. This trend, characterised by demand outstripping output, has been witnessed in the first eight months of 2017, said ANRPC. It adds that the world consumption of NR during that period reached 8.54 million tonnes against the global production of almost 8.04 million tonnes. It was obvious that the strong demand has not quashed the negative sentiments in the market, such as rubber inventories in the region, development in the oil industry, currency strength, and current geopolitical tensions. In other words, “the NR market is anticipated to continue struggling due to plunging prices,” ANRPC deduced. Ajith Kumar, ANRPC’s President, speaking at an annually-organised rubber conference held in Vietnam recently, said “rubber prices will continue to hover at low levels”, adding that this imbalance could impact millions of rubber farmers. Meanwhile, a Price Stabilisation Fund (PSF) will also be created to secure prices as well as provide income support to rubber growers during price declines. Six major rubber exporters will be pitching contributions to fund the initiative.

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The rubber sector has faced demand outpacing production

and China – the latter also being the world’s largest consumer of rubber. The region, with its capacities, is the first to be hit when prices go haywire. The International Tripartite Rubber Council (ITRC), formed by the region’s main rubber players of Thailand, Indonesia, Malaysia, which cumulatively account for 70% of the global rubber (to increase to 80% once Vietnam comes on board), has been working at stabilising and shoring up prices by either cutting back on exports or on outputs to mitigate oversupply of rubber. However, of late, ITRC has failed to stabilise rubber prices when Thailand and Indonesia did not comply to the 615,000 tonnes Agreed Export Tonnage Scheme (AETS), according to Malaysia’s Deputy Plantation Industries and Commodities Minister Datuk Datu Nasrun Datu Mansur. Representing the International Rubber Consortium (IRCo), which was formed under the framework of ITRC, the three countries met in November to tackle the current supply and demand situation of NR. Demand, in the recent quarters, has been on the upswing according to IRCo. At its recent discussions, it identified a few strong sentiments favouring demand for NR including improved global GDP in 2017, pegged at 3.6% against the previous year’s 3.2%; the improvement of automobile sales in major markets of China, EU and Japan, which grew by 4.8%, 3.7%, 7.1%, respectively, from January to September, compared to a year ago. This has had positive impact to tyre production, it said. Additionally, strengthened crude oil prices and other commodities as well as increasing usage of NR for roads and highway construction are seen as favourable for demand.

ITRC: not measuring up? sia dominates global rubber production, accounting for 93% of the total global output: Thailand remains the largest producer, followed by Indonesia and Vietnam. Other large rubber producers in the region include Malaysia, India,

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PRA Nov/Dec 2017 Issue