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Producing countries to restrict exports and growth in demand for natural rubber prices rose sharply
TIME :2016-03-18


     Recently, the world's three largest rubber producing countries Indonesia, Malaysia and Thailand limit the export of natural rubber since March , which is expected to decrease

615,000 tons of export from March to September,of which Thailands limitation is restricted more than half of the share, which is recognize a move designed to boost prices. Agencies believe that this incidence will lead to the increase of global natural rubber price significantly, which is expected to rise to $ 2,000 / ton, or is expected to reach 70%. In addition, the growth of the downstream demand will steadily rise the natural rubber price.

     Now the supply and the demand of natural rubber exists a highly-centralized pattern. From the production area, the total production of natural rubber of Thailand, Indonesia and Malaysia accounts for the proportion of global output up to 60%. The proportion of the export of the three countries occupys as high as 86% of the major exporting countries , while from the region of consumption, China is the world's largest natural rubber consumer and importer, and its consumption and importation accounted for nearly 40% and 70%. Agencies believe that the high concentration of the production of natural rubber decides that the industry in the aspect of supply has a discourse power. Export restrictions and other force majeure factors which lead to limited supply will ,no doubt, be positive to rise the price of natural rubber, which can be verified in history.

     From the historical data, the export restriction of the joint three countries will lead to rising prices of natural rubber. It has happened twice in history that joint international rubber producing countries restricted natural rubber exports , which had brought a significant rise in rubber prices. The first restriction of natural rubber export led by joint rubber producing countries resulted in a violent increase of rubber. In December 2008, due to the continuously decreasing prices of natural rubber , the International Rubber Consortium announced to cut down the export of 915,000 tons of rubber since 2009, from then on prices of the spot natural rubber constantly rose over a year,during which the maximum rose up to 147%. The second restriction of the natural rubber exports occurred in 2012, natural rubber prices also showing a rapidly rising trend. On August 2012, due to the severe stock of natural rubber, the three major rubber producing countries decided to cut down the exports of natural rubber to 300,000 tons from October 1st, which led to the continuously rising of the spot rubber prices lasting 5 months, and the largest increase was up to 25%.

    From the aspect of demand, as the largest market of the tire, the automotive industry, with the continuous growth of China's automobile production and sales, stimulated the demand of tires. According to the Automobile Association statistics, in 2015 China's automobile market totally sold over 24 million cars, of which, the sales of passenger car topped to 20 million. In particular, on December last year, the national car sales rose 15.93% and 15.39%, respectively. In addition, by the impact of automobile purchasing tax, the sales of low-emission car also rebounded.

    With the rapid economic development and the growing use of green resources, the dependence on natural rubber has been increasing. China is the world's largest demander on  natural rubber, whose consumption is around 400 million tons a year, while domestic production is about 700 thousand to 800 thousand tons, the future development has a larger space. As the increase of natural rubber price, domestic enterprises are also expected to have prosperous dividends.

For companies, Sinochem International Natural Rubber Business which counts the third size in the world, yearly production is up to 730 million tons. The company has a wealth of natural rubber cultivation and production resources. It holds 51% stake in GMG which has a combination of natural rubber cultivation, processing and marketing covering a wide range of business. Hainan Rubber is China's largest natural rubber producing enterprise, with 353 acres of rubber forest and protection forest, an annual output of about 200,000 tons dry rubber, and the 30% of Chinas rubber forest and production of dry rubber. In 2014 the company sold about 770,000 tons of rubber, in which production and trade are about 13 million tons and 630,000 tons.