Malaysia can produce 53.3 percent more and India can produce 64.7 percent more than what is anticipated for 2019\".
Kochi: The price of natural rubber(NR) is unlikely to see any major uptrend in the immediate future due to the high levels of inventory and the untapped supply potential. Making a presentation at the two-day India Rubber 2018 on Tuesday, Jom Jacob, senior economist, Association of Natural Rubber Producing Countries (ANRPC) said smallholder "may have to wait another 3 or 4 years for rubber prices to recover".
According to Mr. Jacob, "although the world consumption (14.212 million tonnes) is expected to exceed the world production (13.895 million tonnes) during 2018, this is not getting translated into a favourable demand-supply fundamental". This is because output in major producing countries has the potential to increase substantially in the event of conditions (attractive price and suitable weather) becoming favourable, he said.
Describing it as "production potential", he said the market sentiment will be largely driven by such potential production in 2019. According to Mr. Jacob, "For instance, Thailand can produce 13.9 percent more NR during 2019 than what is anticipated. Malaysia can produce 53.3 percent more and India can produce 64.7 percent more than what is anticipated for 2019".
The production potential is expected to turn in favour of the growers only after 2022. The expected decline in demand in China, largest consumer of natural rubber in the world, is also ruling out possibility of any immediate revival in price. "During 2017, China consumed 5.386 million tonnes of NR by registering 7.5 percent growth. But, NR consumption in the country slowed down to 3.4 percent year-over-year, during the period Jan-Sept 2018", Mr. Jacob said.
"Besides the concerns over trade war with the US, the Chinese auto-tyre sector has been hit by the sharp devaluation Chinese Yuan Renminbi since mid-2018", he added. The increase in crude oil price is unlikely to have an immediate impact in natural rubber price.
