Strong rebound in rubber consumption in 2000.

World total elastomer (natural and synthetic) consumption is estimated by the International Rubber Study Group to have increased from 16.84 million metric tons in 1999 to 18.02 mmt in 2000. This increase of 7% (compared to 2.4% in 1999 and a decline of -0.1% in 1998) is the fastest increase since that of 7.9% in 1984.

There have been striking regional differences: Most of the growth came from the Asian economies, though Eastern Europe stands out as the fastest growing consuming region. Its elastomer consumption increased by 15% over the period, compared to 8% in Asia, 7% in Latin America, Africa and North America, 3% in the EU, and decline in Australia. Synthetic rubber's consumption share declined marginally from 60.3% in 1999 to 59.5% in 2000, of total elastomer consumption. This is the first time the global share of SR has dropped below 60% since 1963. This shift reflects the more rapid growth of NR consumption at 9.1%, compared to 5.6% for SR.

Production

Natural rubber production increased by 3.1%, more than double the increase of 1.2% in the period 1998-1999, but global NR stocks declined by 11% from its historic high in 1999. Despite this decline, the world's stock of NR is still 30% higher than that 5-6 years ago. Thailand, Indonesia and Malaysia, continue to dominate NR production with shares of 34%, 24% and 11% respectively, although NR production in Malaysia and perhaps Indonesia has declined while that of Thailand increased during 2000. All other Asian countries, excluding the Philippines and Sri Lanka, are estimated to have increased output. NR production in all the African producing countries is also estimated to have increased in 2000. The rise in NR output from Latin America is estimated to have continued in 2000.

SR production and stocks are estimated to have increased by 5.4% and 2.1%, respectively, heralding the seventh consecutive year of record stock accumulation. In the Americas, the U.S., Canada and Brazil are estimated to have increased SR output in 2000. There were also increases in SR output in Asia, with Indonesia and Thailand, the two new Asian SR producing countries estimated to have had the largest increases in output. Taiwan and India are the only Asian countries where SR output declined. In Western Europe, Germany, the largest producer of SR in the region, is estimated to have increased output the most. Italy and Sweden followed Germany, as SR output is predicted to have increased by more than 10%. SR output is also estimated to have increased in France, the Netherlands, Spain and the U.K., albeit at less than 10%. At the lower end of the spectrum, it is estimated that output remained unchanged for Austria, Belgium and Finland. SR output rose for all central and eastern European countries, including the former CIS states. Although Russia, the largest producer, increased output quite sharply, Bulgaria, Poland and Romania posted even larger increases in 2000. Positive increases are estimated for South Africa and Australia.

Prices

There has been a downward trend in the INRO Daily Market Indicator Price throughout 2000. It declined by 4% in 2000, despite reaching a maximum of M/S 128.38 cents/kg in February, declining thereafter to reach a minimum of M/S 106.55 in July. All rubber types and grades on the Kuala Lumpur market declined in 2000, although there were large differences among the grades in the extent of the decline.

Higher oil prices resulted in price increases in all the major SR feedstocks.

NR futures trading

NR futures trading in both Japan and Singapore declined in 2000. Futures prices declined in Singapore, but increased in Japan. Currency movements and speculative activities heavily influenced the futures price increase in the Japanese market. News that rubber was re-exported from Japan to China had a positive influence on Japan's futures rubber price.

Market interventions

Following the termination of INRA III in October 1999, the stock of 138,000 mmt of NR had to be disposed. However, nothing was sold until after October. INRO hopes that all sales and deliveries will be completed by the deadline of June 30. By the end of 2000, about 60% of the stockpile had been sold. Though unsucessful thus far, in an attempt to lift rubber prices, the governments of the top three NR producing countries of Thailand, Indonesia and Malaysia met several times in 2000 in an attempt to set a floor price for rubber exports.

Prospects for 2001

The IRSG expects global growth in consumption to fall. With NR prices expected to improve in 2001, assuming no severe adverse weather effects, global NR output is forecast to increase faster than consumption, pushing stocks up again in the latter part of 2001. SR output is forecast to grow at a slightly lower rate than for consumption, resulting in a fall in global stocks. Increased costs of raw materials, due to the sharp rise in the price of petroleum, and improved demand, forced European SBR producers to raise prices last year. The forecast is for SR prices to remain high next year. The rise in SR prices should have a positive effect on NR, the IRSG said.