Demand predicted to keep pushing up natural rubber prices in 2006.

Natural rubber prices are likely to keep rising in 2006 for the second straight year, as demand for the commodity from tire makers is widely expected to outstrip supply, according to the Dow Jones Newswire.

In 2005, the Tokyo Commodity Exchange's benchmark RSS3 contract surged 59.4% to Y202.5/ kg on December 2 from Y127 on January 4, 2005; in the physical market, the widely sold Thai RSS3 variety climbed 37% to 162 U.S. cents/kg on December 2 from 118 cents at the start of the year.

Much of the credit goes to strong demand for the commodity, especially from China. In addition, there have been high crude oil prices (oil is used to make synthetic rubber, a partial substitute for natural rubber), while flesh supplies of natural rubber have been limited.

Demand for rubber has been increasing in countries such as China and India, as tire sales rise in response to ballooning sales of vehicles.

According to a recent paper presented at a National Development and Reform Commission conference in Beijing, China is likely to manufacture and sell 6.4 million passenger cars, vans, buses and trucks in 2006, 14% more than the 5.6 million vehicles likely to be sold in 2005. China sold 223.7 million tires in January-September 2005.