Rubber: Increasing demand will boost price
World natural-rubber consumption is poised to increase this year and next, diminishing surplus and boosting prices of the commodity used in tyres, according to The Rubber Economist Ltd.
The "surplus is now much smaller than before," said Managing Director Prachaya Jumpasut of the London-based industry adviser. Prices will probably climb to $3.3 a kilogram by the end of 2014 as stockpiles drop to a 'relatively low' level versus consumption, his presentation showed.
Rubber entered a bull market in August as growth in China, which represented 35 percent of demand in 2012, rebounds from a two-quarter slowdown.
Passenger vehicle sales in the country jumped the most in four months in August, according to the state-backed China Association of Automobile Manufacturers.
Natural-rubber consumption will climb by 1.5 percent this year and by 4.1 percent in 2014 from 11.04 million metric tonnes in 2012, Prachaya said at a conference in Indonesia. He cut his forecast last month for a third year of surplus to 209,000 tons in 2013 from 475,000 tons because of better-than-expected demand in Asia, where producers have reduced tapping to support prices, he said in an e-mail recently.
Thailand, Malaysia and Indonesia, representing about 70 percent of supply, reduced exports by 300,000 tons in the six months through March to boost prices.