Tuesday, November 29, 2011

Exporters see demand drop


The prices of natural rubber continued to fall, pushing down the growth in the commodity's global supply this year to 5.6% (to 10.023 million tonnes) from an earlier estimated growth of 6%. The current indications are that the price fall started impacting on the supply. The total supply from member countries of the ANRPC, which grew annually at 10.6% in Q1 and 10.7% in Q2, had slowed down to 2.5% in the third quarter. It is expected to slow down further to 0.6% in the fourth quarter.

According to a rubber exporter from South Sumatra - Indonesia, the rupiah’s recent weakness gives rubber producers room to breathe despite lower rubber production and a possible price drop. The country is entering a heavy rainy season, which will reduce natural rubber production.

Rubber prices are down to just above $3 per kg, compared to $6.4 per kg in February. The price drop stems from worries about the economic slowdown in European countries, which account for 11% of total global demand for natural rubber. Demand from the 11 members of the Association of Natural Rubber Producing Countries, which account for 57% of global consumption, is estimated to rise 2.9% next year to 6.3 million tons.

The dollar could be volatile for the next month, or until political leaders find a solution to the euro zone crisis. Asian currencies will rise again in six to nine months’ time as investment returns to the region.

Read lot more in Rubber4U – 1st December 2011 issue

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