Rubber Sector To Recover On Higher Natural Rubber Demand Next Year

By Harizah Hanim Mohamed KUALA LUMPUR, Dec 26 (Bernama) -- The natural rubber (NR) industry is expected to recover next year, supported by increased demand from consuming countries amid low supply, says Malaysian Rubber Board (MRB) Director-General Dr Salmiah Ahmad. She said the brighter prospects would be supported by China’s mounting demand for the commodity which has been on the increase since this year. "This means demand will exceed the world's supply of natural rubber," she told Bernama. A Monetary Fund report said global demand for NR will increase 5.3 per cent in 2014 and 2015. However, Malaysia's natural rubber production declined to 826,421 tonnes in 2013 from 922,798 metric tonnes recorded in 2012. The International Rubber Study Group had reported that natural rubber supply declined to 2.5 million tonnes in June from 3.06 million tonnes registered in the same month last year. "Therefore, MRB expects rubber prices to be stronger next year," she added. On Dec 24, physical price for tyre grade Standard Malaysian Rubber (SMR) 20 stood at 505.5 sen against 748.5 sen registered on the same date last year while latex-in-bulk settled at 368 sen a kg from 554.5 sen a kg a year ago. On rubber price controls, she said major rubber producing countries have taken measures to control any further fall in rubber prices. "The International Tripartite Rubber Council (ITRC) members gathered in November to overcome and seek solutions for issues faced by rubber producers, especially to shore up the commodity's price," Salmiah said. At the ITRC Ministerial Committee Meeting this year, Cambodia, Laos, Myanmar and Vietnam showed keen interest in ITRC's agenda to strengthen NR prices for mutual benefit. Malaysia, Indonesia and Thailand account for 67 per cent of the global production of natural rubber while Cambodia, Laos, Myanmar and Vietnam made up 13 per cent. "These countries are very sensitive to falling rubber prices as smallholders receive the maximum impact," she added. From January to October, Malaysia produced 560,678 tonnes of natural rubber, sixty per cent of which come from smallholdings. On the impact of oil prices on the industry, Salmiah noted that over the years, correlation between rubber-based-products and crude oil have been minimised. "There will be minimal impact on rubber prices caused by global crude oil prices as the correlation between both commodities have lessened due to substitutes used in rubber-based products. "Industry players have adjusted the formulation, which requires less oil elements, However, rubber prices would be affected by increased rubber consumption and extreme supply volatility, along with the withdrawal of foreign labour and smallholders as they find the sector no longer lucrative," she added. -- BERNAMA