Some experts believe that the rubber market can now witness many changes, especially the rubber price which can be affected from negatives to positives.
Some factors influencing the current rubber price
Supply – demand and Currency exchange rate
The Association of Natural Rubber Producing Countries (ANRPC) shows that the natural rubber price in 2019 is predicted to be unchanged. This is the result form the influence of some factors including supply – demand and high oil price, USD increase, local currency decrease in some big rubber-produced countries, or the effect of high rubber inventory level on other consumer markets.
Mr Jom Jacob – a senior economist at ANRPC Kuala Lumpur, revealed that since the rubber market has shown many supply factors which are partly higher than the actual supply, improvements regarding prices can lead to increases of supply on the market.
Decrease in the area of new planting and rejuvenation
India Rubber Meet held at Kochi showed that rubber price can negatively affect the production until 2021 – 2022. For the area of new planting and rejuvenation, a remarkable decrease was witnessed, from 676.000ha in 2012 in producing countries including India to 197.000ha in 2017. Thus, as Mr Jacob stated, the quantities of rubber tree which are ready for rubber-tapping in 2022 will be less than now.
Oil price and rubber inventory
There is no effect of increase in oil price in 2018 on the rubber price. Also, the nature rubber inventory at high level of Shang Hai stock exchange and the excessive inventory of 591.599 tonnes are now putting pressure on the market.
Positive long-term prospects of rubber market
Despite some obstacles, the positive long-term prospect of rubber market is obvious. Particularly, Mr Jacob said that the world rubber production increased by 6.6% to 10.39 million tonnes during 9 months in 2018, and it is predicted that the total natural rubber in global in 2018 will reach 13.89 million tonnes. Meanwhile, the natural rubber consumption also increased by 6.6% to 10.65 million tonnes during 9 months in 2018, and it is predicted that the total natural rubber in global in 2018 will reach 14.21 million tonnes.
Hidde Smit – The Netherlands Rubber Economy’s analysis and forecast consultant and Secretary-General of the International Rubber Study Group (IRSG), Singapore, said that the ability of broadening supply – demand deficit in the future can push natural rubber price in the next 5 – 6 years, and increasing price changes can remain until 2030. Mr Smit also revealed that “ Natural rubber price can rise to 1,8 – 2 USD/kg until 2025 and afterwards”.
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