2012 global rubber output forecast cut after Q1 fall

MUMBAI (Reuters): Global natural rubber output in the first quarter fell by a sharper-than-expected 9.5 per cent as farmers in Thailand and Malaysia trimmed tapping on a steep drop in prices, promoting an industry body to cut its production forecast for 2012.

The Association of Natural Rubber Producing Countries (ANRPC) revised down its total production estimate in 2012 for member countries to 10.297 million tons from 10.42 million tons estimated earlier.

Output may fall below the revised estimate if prices continue to drop, it said in a report on Thursday.

The average price of rubber in Thailand, the world’s top producer, fell 30 per cent in the first quarter of 2012 from a year ago, the group said, on subdued demand and a decline in crude oil prices.

Rubber prices normally track crude oil trends due to possible substitution between natural rubber and petroleum-derived synthetic rubber.

“The current global economic situation and short-term economic outlook do not support the possibility of a faster growth in natural rubber demand in the second quarter,” Jom Jacob, senior economist at ANRPC wrote in the report.

Natural rubber prices will remain under pressure in short-term, the report said.

“Currently all these exogenous factors are moving slightly unfavourable to natural rubber and there is no reason to expect a reversal of the trend in the short-term,” it said.

Exports from member countries in first quarter fell 6.6 percent on year, but are likely to recover in second quarter of the year as tyre makers in China are expected to replenish their inventory.

The ANRPC members include Thailand, Indonesia, Malaysia, Vietnam, Cambodia and Sri Lanka. Member countries account for more than 90 per cent of global output and exports.