China's appetite for rubber increasing

Natural rubber consumption in China, Cambodia’s largest rubber market, is expected to rise by 7.2 per cent in 2013 after growing by 4.5 per cent last year, according to the Singapore-based International Rubber Study Group (IRSG).

Demand in North America was expected to grow 4.2 per cent this year after shrinking by 6.9 per cent in 2012, IRSG told the Post yesterday.

In early December, the Post reported that low demand in China was keeping Cambodian rubber prices down.

“We do not comment on future rubber prices,” IRSG senior economist No Dock Moung told the Post yesterday.

Mak Kimhong, president of the Cambodia Rubber Association and owner of the Chhop Rubber Plantation in Kampong Chham, said the rubber price had risen to more than $3,000 a tonne in the past two weeks from about $2,700.

“If the economy is good in those countries [China and the US], the price will be higher,” Kimhong said.

Generally, the rubber price was up from January to March because there was not much supply, and would go down in May or June, he said.

“The price will go further than $3,000, but we don’t know how much it will rise.

“For me, the price drop to $2,600 or $2,700 a tonne is still good for rubber planters.

“If the rubber price drops to $2,000, large-scale planters don’t make a big profit, but for a family it’s still good profit.”

Cambodia’s rubber exports in 2012 reached 54,520 tonnes, up 16.6 per cent from 46,726 tonnes in 2011.

The total value in 2012 was $158,257,874, compared to $200,931,401 in 2011, a drop of 21.2 per cent.

No Dock Moung said a significant volume of China’s rubber consumption was for export — as rubber end products — to Europe and North America.

Global demand for natural rubber was forecast to increase by six per cent this year if the economic growth rate reached the IMF’s forecast of 3.6 per cent, the IRSG said.

“Given the above scenario, we are expecting a surplus of 179,000 tonnes for 2013,” No Dock Moung said.

“Should the world economic growth rate decline to 1.9 per cent, we are expecting a 2.3 per cent growth in natural-rubber demand and a deficit of 292,000 tonnes.”a