Elastomer consumption rose 5.7% in 1996.
The figures, presented at the IRSG's meeting in Liverpool, show the sharp increase can be largely attributed to the sizeable growth in Chinese elastomer consumption of 24%. Excluding China, world elastomer consumption grew only 3.8% last year. Behind China, central and eastern Europe again showed the sharpest increase in rubber offtake compared to other regions last year.
While world synthetic rubber consumption increased quite impressively by 5.4%, global natural rubber offtake rose even more by 6.2% last year. Percentage of world SR consumption fell in 1996 for the tenth consecutive year to 60.6%, representing the lowest level in more than 30 years. The SR share in major consuming countries in North America and western Europe increased despite a rise in the oil price and a sharp decline in NR prices throughout 1996. The increase in global NR share resulted from continuing faster growth rates in NR consumption not only in Asia, but also in some central and eastern European countries, which traditionally have relatively high SR shares.
World NR stocks continued to increase in 1996, but at a declining pace compared to that of the first half of 1995. The slow increase in NR stocks was due to slower growth of output in the first half of last year. World output increased by 3.4% in the first half of last year, but then the growth rate more than doubled to 7.7% in the second half, taking growth for the year to 5.5%. The sharper increase in the second half of the year was due to significantly higher production in Thailand. For the year as a whole, output in Indonesia increased even faster but a decline was estimated for Malaysia. Output in African producing countries increased quite sharply last year and there were reports of increasing European imports from Africa at the expense of Malaysian output. For most west African producing countries, further currency depreciation may have had an impact on the rise in their rubber output last year. World SR output is estimated to have increased by 3.2%. Like NR, output showed a lower growth rate than consumption, resulting in slower growth of SR stocks for much of last year.
The natural rubber price declined at its sharpest rate for seven years in 1996. The decline occurred mainly in the first half of the year. Despite the decline, rubber prices were still at historically high levels. Last year futures trading turnover declined quite sharply despite the weak yen/U.S.$ exchange rate, which normally would have attracted futures buying interest. The increase in futures trading in 1993-94 was at a time when demand was also improving, and was a major factor in pushing rubber prices to the peaks of early 1995. Last year, despite falling activities in futures trading, rubber prices fell more slowly, due to opposing influences, including currency factors and continued improvement in industrial sector demand in major consuming countries.
In Europe, the styrene price was relatively steady in 1996 compared with the previous year. Butadiene prices declined early in the year but then recovered and showed a steady rise in the final quarter. U.S. SR feedstock prices increased in 1996 after the decline experienced in the second half of 1995. The strength in oil prices may have held feedstock prices up last year. Judging from the European SBR large volume contract list price, SR prices have been declining steadily since the second half of 1995.
The world elastomer industry has now grown for three consecutive years and in four of the last five years. But the IRSG predicts the growth in world elastomer consumption to fall from the relatively high rate of last year closer to the long-term rate, i.e. a growth rate of 3.4% in 1997 and 3.6% in 1998. For most regions, the growth rates are quite similar to those in 1996, with western European countries expected to improve in 1998 over 1997 and vice versa for the U.S. Central and eastern Europe is expected to progress steadily during the next two years, while a steady growth is forecast for Asia/Pacific and central and South America. This means that the sharpest growth in elastomer consumption is expected to be in central and eastern Europe, while the slowest will be in the U.S. In 1997, NR is forecast to grow 3.8% and SR 3.2%, resulting in a marginal decline in the share of SR to 60.5%. A closer growth rate of 3.8% for NR and 3.5% for SR are forecast for 1998, leaving the percentage of SR at 60.4%. However, it may not be long before the SR share will start to pick up towards the year 2000.
U.S. growth is expected to be modest in both 1997 and 1998, while Canadian growth is expected to be higher than that of the U.S. in both years. The growth rate of Mexico's elastomer consumption is expected to continue but at a slower pace than in 1996. There should be a turnaround in Brazilian elastomer consumption, after a decline last year, while other Latin American countries also should improve. The region may show a sharper increase in 1997 than in 1998.
In Europe. U.K. is expected to grow less than Germany and France because of the strength of the pound sterling, which will depress export markets. The growth in Italy is also not expected to be as high as other E.U. countries, but reasonable growth is likely in Spain. Elastomer consumption in central and eastern Europe should increase throughout, possibly with the exception of Romania in 1997, but all countries should show a positive growth rate in 1998. Russian elastomer consumption should continue to recover during the next two years. This region is expected to show higher growth rates compared to western Europe and North America. NR consumption in central and eastern Europe should continue to increase quite rapidly but from a relatively low base.
In Asia, Chinese elastomer consumption is expected to surpass that of Japan by 1998. However, 1997 will see the Chinese growth rate of rubber consumption slow because of the problems in its vehicle industry, but will pick up again in 1998. On the macro level, the Chinese economy has a large surplus, and on the micro level, the Chinese rubber industry also has a supply glut and its major end use. the tire sector, faces an excess of supply. Japanese rubber consumption should grow faster in 1998 than in 1997. The growth of Indian elastomer consumption also is expected to be somewhat lower in the short-term because of the situation in the automobile industry. But in the longer term, mass investment in tires and vehicles should make India one of the fastest growing countries. Other Asian countries' growth is forecast at similar rates to 1996.
World NR production is forecast to grow 4.1% in 1997 and 3.3% in 1998, hence NR stocks are expected to remain high until 1998. The CFA Franc continued to weaken early this year, giving added incentive for the African producing countries to expand output despite the decline in international rubber prices. However, for continuing long-term progress, privatization is now an important issue for the African NR industry. With the effort to privatize, which should result in their rubber industry expanding, the smaller rubber producing countries in Africa and Asia are expected to continue to grow relatively rapidly compared to the top three major producing countries. For the latter, Indonesia is expected to show the sharpest growth, while Thai output will continue to grow, but at a lower rate, and output will continue to stabilize in Malaysia.
World SR production is expected to rise by 3.4% in 1997, roughly the same rate as SR consumption at 3.2%. SR output should grow fastest in central and eastern Europe, while growth is likely to be high in Asia and some western European producing countries as well. Following demand trends, SR output is forecast to expand slightly faster, by 3.7% in 1998. The growth rates for most countries will be broadly similar to those achieved in 1997.
For the period up to the year 2000, elastomer consumption is expected to follow the trend of the past 15 years or so for most regions. This expectation is based on the assumptions of continued moderate growth in North American and western European economies to the year 2000.
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|Title Annotation:||Market Focus; International Rubber Study Group report|
|Date:||Jul 1, 1997|
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