ANRPC says China, India will drive up natural rubber consumption

Growth in demand throughout India and China is set to rekindle global consumption of natural rubber, according to the Association of Natural Rubber Producing Countries (ANRPC).

In its monthly review of the market, released May 24, the ANRPC said worldwide NR consumption is anticipated to grow "faster than what was expected until a month ago."

The outlook on consumption during 2018 has been substantially scaled up in the case of China and India, said the association. The two countries combine to account for 48 percent of global NR consumption.

Based on the revised outlook, consumption in China is expected to rise by 6.2 percent to 5.7 million metric tons, a significant change from the 0.6 percent drop anticipated until a month ago.

In India, the revised outlook suggests consumption rising by 10.9 percent to 1.2 million tons during 2018. This compares with growth of 6.8 percent expected just a month ago.

"The revised scenario implies that a quantity of 790,000 tons will be consumed additionally in the two countries as compared to the scenario expected a month ago," the ANRPC said.

The association also reported a "better-than-expected performance" during the first four months of 2018, heralding an improved outlook for the full year.

During the first four months, world consumption of NR increased by 5.5 percent year-on-year to 4.6 million tons. Production increased 2.6 percent to 4 million tons during the same period.

For 2018, global production of natural rubber is expected to reach 14.2 million tons, 6.4 percent higher than the year before. Consumption, similarly, is set to grow 6.4 percent to 14.3 million tons, the ANRPC said.

"The above favorable developments in the demand-supply fundamentals have helped the market to register a marginal recovery despite the unfavorable conditions," the association said.

Unfavorable conditions, according to the ANRPC, were caused by the US.-China trade tensions, high level of inventory held at the designated warehouses of the Shanghai Exchange and volatile exchange rates.

Market sentiment has benefited from the seasonal low supply, coinciding with the leaf-shedding of rubber trees.

Furthermore, India has scaled down its production outlook for 2018 by 99,000 tons to 720,000 tons. This follows a 11.4-percent reduction in output during the first four months of the year.

Harvesting likely will be disrupted in India and Sri Lanka from June to August due the southwest monsoon expected to set in by the end of May, the ANRPC said.