Kula Lumpur – Growth in demand in India and China is set to rekindle global consumption of natural rubber, the Association of Natural Rubber Producing Countries (ANRPC) has forecast.
In its monthly review of the market, released 24 May, 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 jointly contribute to around 48% of global NR consumption.
Based on the revised outlook, consumption in China is expected to rise by 6.2% to 5.7 million tonnes – as against a 0.6% fall anticipated until a month ago.
In India, the revised outlook suggests consumption rising by 10.9% to 1.2 million tonnes during 2018. This compares with growth of 6.8% expected just a month ago.
“The revised scenario implies that a quantity of 790,000 tonnes will be additionally consumed in the two countries as compared to the scenario expected a month ago,” ANRPC commented.
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% year-on-year to 4.6 million tonnes. Production increased 2.6% to 4.0 million tonnes during the same period.
For 2018, global production of natural rubber is expected to reach 14.2 million tonnes, 6.4% higher than the year before. Consumption, similarly, is set to grow 6.4% to 14.3 million tonnes, the ANRPC said.
“The above favourable developments in the demand-supply fundamentals have helped the market to register a marginal recovery despite the unfavourable conditions,” the association further noted.
Unfavourable conditions, according to 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 been partly benefited by the seasonal low supply, coinciding with the leaf-shedding of rubber trees.
Furthermore, said the association, India has down-scaled its production outlook for 2018 by 99,000 tonnes to 720,000 tonnes. This follows a 11.4% fall in output during the first four months of the year.