Gap of China’s Natural Rubber Supply may Expand Further

Market researcher RnR said in a recent report that since 2011, the global natural rubber market has been in oversupply, the surplus in 2011 was 220,000 tons and in 2015 was about 140,000 tons.

Oversupply in General

The report estimated that affected by increasing natural rubber supply in proarea and slowdown in growth of the tire industry, the global natural rubber supply will be in excess in 2016-2020, and the surplus in 2020 would be around 110, 000 tons.

Because of weak global economy and excessive natural rubber supply, the price of natural rubber has been low.

As of end-2015, the price of natural rubber in China dropped to around 1,140 US dollars/ton, closing to the cost value. In 2016, the average price of global natural rubber has been in the range of 1,200 dollars to 1,500 dollars per ton.

Last year, China’s output of natural rubber dropped 5.5% year on year to 794,200 tons.

The figure is expected to decrease by 5.3% this year to 752,100 tons this year.

As the world’s largest natural rubber consumer, China consumed natural rubber of 4.68 million tons in 2015, accounting for 38.5% of the world’s total natural rubber consumption.

Because of severe imbalance between supply and demand, China relies heavily on natural rubber import to satisfy its demand.

Expanding Gap in Supply

In 2015, China’s import of natural rubber grew 4.8% year on year to 2.74 million tons, while the average import price dropped 24.5% to 1,431.6 dollars/ton.

The report said in 2016-2020, the contradiction between supply and demand will aggravate further. By 2020, the gap will be 5.14 million tons, up 32.3% form 2015.

Because of resource restrains, natural rubber industry concentrates in the southeast countries, such as Thailand and Malaysia. The primary actors of the industry are Sri Triang, Von Bundit, and some others.

In the coming years, some companies will expand the planting areas in the leading producers and enhance productivity.

In addition, they will focus on the application of natural rubber in high-end markets, such as military tire, in a bid to increase gross profit margin and to strengthencompetitiveness.