By Supunnabul Suwannakij
April 11 — Global natural-rubber reserves are poised to advance to the highest level in 13 years as production exceeds consumption through next year, pressuring prices, according to London-based industry adviser The Rubber Economist.
Inventories will total 2.17 million metric tons in 2014, the highest level since 2001, Managing Director Prachaya Jumpasut said in an e-mail yesterday. That compares with 1.56 million tons in 2012 and a record 2.68 million in 2000, he said.
Futures fell into a bear market this month on signs that production will outpace demand, and as reserves in China, the biggest consumer, reached a record in March. Falling prices may cut costs for Bridgestone Corp. and Michelin & Cie., the biggest tiremakers, and curb revenue at Sri Trang Agro-Industry Pcl, Thailand’s largest publicly traded exporter.
The increase of the stock-to-consumption ratio from 1.2 months in early 2012 to 2.2 months of consumption in 2014 will have a negative impact on prices, Prachaya said, without giving a specific figure. The ratio in 2000 was at 5 months, he said. Prachaya has studied the commodity for more than 30 years.
Futures on April 1 ended 20 percent lower than this year’s highest close in February, the common definition of a bear market. Rubber for September delivery traded at 279.6 yen a kilogram ($2,808 a ton) on the Tokyo Commodity Exchange today, down 7.6 percent this year. Prices rallied 15 percent in 2012 after Thailand, Indonesia andMalaysia, which represent about 70 percent of global output, agreed to restrict exports.
World rubber production will probably exceed demand for a fourth year in 2014, said Prachaya. Still the surplus may narrow to 104,000 tons from 394,000 tons in 2013, as slower growth in Europe’s consumption will be offset by stronger demand in Asia and the U.S., he said.
Prachaya’s estimates compare with the 153,000 tons surplus for 2014 forecast in January by the Singapore-based 35-nation International Rubber Study Group, or IRSG.
Inventories in Qingdao, China’s main import hub, reached a record 358,300 tons by March 15, Cai Zhiwei, general manager at the Qingdao International Rubber Exchange Market, said March 22. The country accounts for 34 percent of global demand, IRSG says.
Source: Bloomberg
