IRSG cuts rubber demand growth outlook

The International Rubber Study Group trimmed its global demand growth outlook to 3.8 percent for this year, down from its previous projection for a 4 percent rise, due to lingering worries about consumption in recession-struck Europe.

But China may offer a glimmer of hope despite recent economic data suggesting a slowdown in the Asian giant, the IRSG said as it lifted its forecast for rubber demand from the world’s top consumer by more than 4 percent. “Clearly the most important factor that people are looking at is the state of the economy in Europe, the possibility of a greater slowdown in Chinese economic activities and whether the US can actually sustain what appears to be a recovery in its economic activities,” No Dock Moung, senior economist and statistician at the IRSG, told Reuters in an interview.

The IRSG pegged global demand for natural and synthetic rubber at 27 million tonnes for 2013, down from its prior estimate of 27.7 million tonnes. China’s demand is expected to rise to 9.5 million tonnes from 8.9 million in 2012, it added. The group had previously forecast demand from China at 9.1 million tonnes for 2013.

“China is still the factory for the global rubber industry. It’s converting a lot of rubber for its own domestic needs, and it is also actually exporting. It’s a combination of both, the growth of domestic demand and also export market,” No said. China accounts for about 35 percent of global demand for natural and synthetic rubber, used mainly to make tyres. Vehicle sales in the country rose 11.2 percent in June from a year earlier, data from the China Association of Automobile Manufacturers showed.