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Natural rubber

Slowdown in utilization growth

World utilization of natural rubber increased by 2 percent to 5.64 million tonnes in 1993, half the rate recorded in 1992. This slow growth reflected economic recession, which adversely affected automobile and tyre industries in all major markets, except those of North America and a number of developing countries. Declines were recorded in most countries of Europe and in Japan.

In the United States, consumption of natural rubber increased by 3 percent to 940 000 tonnes in 1993, following a 20 percent recovery in 1992 after declining by 13 percent for two years. The increase in the most recent years restored the long term upward trend interrupted by the start of economic recession in 1990, and reflected higher production of both tyre and non-tyre goods. Demand in Canada also rose. However, the second largest consuming country, Japan, utilized smaller quantities for the second successive year. The recession there affected domestic demand for automobiles, while exports were reduced because of slow growth in several importing countries. In Europe, consumption in the EC declined, reflecting lower demand in all countries except the United Kingdom, which registered a small increase.

In the developing countries, utilization of natural rubber in 1993 increased by 4 percent to 2.8 million tonnes. These countries now account for half of world consumption. The increase in 1993 reflected continued rapid growth in numerous countries in Asia and Latin America, notably China, India, Malaysia, Thailand, the Republic of Korea, Brazil and Mexico. These countries used larger quantities of natural rubber to meet increased demand from their expanding automobile industries.

In 1992 global utilization increased by over 5 percent to 5.5 million tonnes. The increase partly reflected recovery in demand following declines in the previous two years. One half of the increase in world consumption occurred in the United States, where the expansion was 20 percent. There were also large increases in India, the Republic of Korea, Malaysia and Thailand. However, in the EC, consumption remained virtually unchanged as increases in Germany, Spain and the United Kingdom were offset by declines in France, Italy and other EC countries. Japan utilized smaller quantities following reduced domestic and export demand for automobiles.

Slower growth in production in 1993

World production of natural rubber rose by only 2 percent to 5.75 million tonnes in 1993 compared with a 5 percent increase in 1992. The slower growth reflected depressed prices with smaller increases in Thailand, Indonesia and some other producing countries, a further decline in Malaysia and a downturn in Africa. Despite this slackening in growth of world production, it still exceeded consumption and exerted further downward pressure on prices.

In 1992, global production of natural rubber rose by 5 percent to 5.63 million tonnes, following a 3 percent increase in 1991. Output was greater in all producing countries, except in Malaysia, Nigeria and Zaire, where it declined. Among the major supplying countries, Thailand recorded the highest increase 14 percent, followed by Indonesia, 8 percent.

Stocks rose further

In 1993, there was a small surplus for the third consecutive year, as global output exceeded consumption. World stocks were expected to increase by 110 000 tonnes to reach 1.74 million tonnes by the end of 1993. representing 31 percent of the world annual apparent utilization.

Prices and export earnings declined in 1993

Export earnings from natural rubber declined in 1993 due to the reduced prices and smaller volume of trade that reflected lower demand in most major markets. After some recovery in world prices of natural rubber at the beginning of February 1993, the INRO Daily Indicator Price (DMIP) registered a continued decline thereafter. The decline reflected not only depressed demand but also the prospect of the collapse of the International Natural Rubber Agreement (INRA) and eventual liquidation of stocks held under the Agreement. From October 1992 to September 1993 there was no buying by the INRO buffer stock manager despite prolonged periods when prices were below the "must buy" level. This inaction reflected an impasse in the INRO council over endorsement of a mandatory 5 percent reduction in INRA II reference prices under Article 31.7 of the Agreement.

In 1992, world trade in natural rubber recovered by about 3 percent to 4.1 million tonnes. This reflected the sharp increase in imports into the United States, and some increases elsewhere, notably in Canada, Brazil, China and the United Kingdom. Increasing import demand also led to a rise of about 16 percent in exports from Thailand, and a recovery in exports from Africa. However, exports from Malaysia declined by 9 percent and from Indonesia by 4 percent. Export earnings of developing countries rose by 5 percent in 1992 to about $3 520 million, reflecting the larger volume of shipments and a slightly higher average level of prices.

Utilization expected to exceed production in 1994

Early forecasts indicated that growth in global demand for natural rubber would probably accelerate in 1994. World utilization was forecast to increase by 4 percent, due to an anticipated recovery in the tyre and non-tyre sector in Japan and western Europe. However, world production of natural rubber was only forecast to increase by some 1 percent, about half the rate in 1993. This slower growth would reflect the prolonged period of depressed prices in many producing countries exacerbated by a further decline in Malaysia. World utilization was expected to exceed output in 1994 and the price of natural rubber was likely to rise somewhat, especially during the second half of the year.

Production

Utilization

¹ From 1991 includes New Länder.

Exports

Imports

Value of exports

Closing stocks

Source: IRSG.

Export unit value

Prices

¹ DMIP is the Daily Market Indicator Price of the International Natural Rubber Organization.

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