The Hindu Business Line : Growth in natural rubber consumption may slow down on price spurt: IRSG

THE International Rubber Study Group (IRSG), a London-based think-tank on global rubber sector, has projected a slower rate of growth in consumption of natural rubber (NR) in the next two years due to higher prices.

"The recent higher price of NR relative to SR (synthetic rubber) may result in a relatively slower increase in consumption of NR over the next two years," IRSG said in its "Rubber Industry Report - Review of 2005 and The Prospects for 2006-07".

The world aggregate output of natural rubber should improve to show growth in the current year and next. In 2005, global natural rubber production increased only by a meagre 1.3 per cent to 8.76 million tonnes as only Indonesia recorded a production growth among the top three producing countries.

The growth rate of world natural rubber consumption exceeded production for most of last year. This resulted in global stocks declining since last summer, IRSG said.

Natural rubber consumption grew sharply by 5.5 per cent to reach 8.78 million tonnes compared with 1.3 per cent for synthetic rubber. As a result, the share of SR in consumption fell to 57.7 per cent, its lowest level since 1964.

Natural rubber prices rose 41 per cent during 2005. "The underlying cause of prices being carried so high were tight supply conditions, exacerbated through bad weather in South-East Asia and China and, towards the latter part of the year, via sharply rising oil prices," the report said.

The organisation forecast that total rubber consumption would increase by 3.7 per cent in the current year over the previous year. However, in 2007, a higher growth rate of 5.7 per cent is expected.

"This year, non-EU Europe and Asia/Pacific should continue to show relatively strong growth, balancing weaker performances in North America, Latin America and Africa, while the EU should recover to show some kind of growth. Next year, growth rates are expected to improve in all regions," the report said.