IRSG predicts rubber consumption to increase 4.7%.
The IRSG forecasts indicate that global rubber consumption is to increase by 4.6% to 20.94 mmt in 2005 and 4.3% to 21.84 mmt in 2006. The recent trends of a slower increase in NR values relative to SR prices might result in relatively more rapid growth in NR consumption relative to SR usage this year, i.e., 5.3% as compared to 4.1%. However, both types of robber will show about the same rate of 4.3% in 2006. In 2005, the EU and the rest of Europe are expected to show a relatively gradual increase as compared to other regions.
In 2006, the rate of growth of total consumption in Asia/Pacific, EU and other Europe is forecast to rebound, while a slowdown is expected in North America, Latin America and Africa. World NR output is expected to rise by 4.8% in 2005 before slowing to 1.6% in 2006. Malaysia will lead the increase against Indonesia and Thailand while other Asia, Africa and Latin America will see relatively slight slower growth.
World SR output is anticipated to slow to 3.0% and 2.5% for the next two years. A sharp slowdown in the growth rate of production in other Europe is expected in 2005 before it picks up in 2006, while the Asia/Pacific region is expected to provide the engine for growth in the next two years. The weakness of rubber consumption in the European Union (EU), other Europe and Africa contributed to the slowdown in the expansion of global rubber consumption.
In 2004, natural rubber (NR) and synthetic rubber (SR) consumption increased to 8.19 mt and 11.82 mt, respectively. Though there was an improvement towards the end of the year, growth of consumption of NR was slower than SR in 2004, causing the share of SR in rubber consumption to rise to 59.1%.
In 2004, aggregate world NR and SR output rose for the third consecutive year to 20.44 mt, representing an increase of 4.9%, but a slowdown from the previous year. NR output trends among the leading NR producing countries varied markedly in 2004. Much of the growth in world NR output was the result of a sharp rise in Mal-aysian and Indonesian production, while the level of Thai output fell marginally.
As for SR production, steady growth in the Asia/Pacific region and the recovery in North America continued last year, and there was also an improvement in the EU. However, growth of SR output in other Europe dropped quite sharply in 2004.
The sharper rise in NR output relative to consumption resulted in stock-accumulation of some 260,000 mt last year. Inventories have now risen to the level reached in the first quarter of 2001 when NR prices were hovering around 30-year lows. Nevertheless, stocks are still well below the record highs of early 2000. Following the norm in recent years, world SR production and consumption grew roughly at the same rate, with inventories rising last year.
Following a huge adjustment at the end of 2003, NR prices in 2004 failed to regain the momentum of the previous two years. Prices were to end the year, on average, almost 10% below recent peaks. The change in direction is a reflection of alterations to fundamentals, which was working towards replenishing global NR stocks that had been run down to low levels. However, seasonal factors were to continue influencing prices throughout the 12 months of 2004.
The world oil market persistently grabbed the headlines in 2004, as prices continued to move higher in response to a range of competing factors, and it seems impossible to look ahead to events in the synthetic rubber sector in 2005 without placing the same emphasis on the oil price. As things stand, SR values are likely to stay firm in 2005.
The recovery of the U.S. light truck market was a particular bright spot for commercial vehicle sales in general. Although the rise in demand was partially technical, it, nonetheless, gave impetus for production. However, demand for passenger cars failed to impress, recording marginal growth at best. Nonetheless, production was up, led by a huge 6% expansion in Asia.
Latest data suggest a pick-up in the general rubber products sector in the U.S. in the second half of 2004.
Exports of medical gloves began 2004 in a mood of great optimism, as volumes continued to rise throughout the first quarter of the year. However, the market turned sour over the remaining nine months, as volumes from traditional markets began to fall away. Changes taking place at the fundamental level forced latex prices to undergo a process of adjustment, marking 2004 as the end of a short lived era of high and rising prices. NR latex consumption and production continued to increase in 2004, up by 6% and 4%, respectively.
Beset by political instabilities, volatile fiscal arrangements and changing monetary environments, the global economic recovery emerged from 2004 intact, thanks largely to household spending. Private business spending also made a significant, direct contribution to the economy, and indirectly when household spending faltered. However, the rate of economic growth was not uniform, with the U.S. leading the way, while Japan slipped almost back into technical recession. Other economies also suffered in 2004, especially Korea. Nonetheless, 2004 was a year of robust consolidation.
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|Title Annotation:||Market Focus|
|Date:||Apr 1, 2005|
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