Global rubber output expected to drop in Q4

KOCHI: Following production shortfalls reported from India even during the peak production months of October-November, the Association of Natural Rubber Producing Countries (ANRPC) has predicted that global natural rubber production would fall by 3.8 per cent during the fourth quarter of the current year.

However, the ANRPC, which accounts for over 92 per cent of the global rubber production, has stated that the overall world production for 2010 would be on the higher side given major upward revision reported by Indonesia for Q3 and Q4. This was against smaller downward revisions reported by Thailand and Malaysia.

The production of natural rubber in India had declined by 5.4 per cent in November to 88,500 tonnes as against 93,500 tonnes during the same month last year, provisional estimates put out by the Rubber Board of India revealed.

However, the Automotive Tyre Manufacturers Association of India had pointed out that the actual rubber production data for November 2010 shows a far steeper fall at 15 per cent over the projected data for the month at 104,000 tonnes. But the cumulative production between April-November was up two per cent at 546,150 tonnes as against 530,900 tonnes last year.

India has also scaled up the country’s production targets for 2010 to 853,000 tonnes from the earlier projection of 844,000 tonnes. Although rubber growing areas in India witnessed unusually heavy rains in November, the production forecasts are based on better than expected output during the third quarter of the current year.

Revised estimates put out by the Rubber Board show that production shortfall for the third quarter was only 1.8 per cent as against the 4.9 per cent expected earlier. The revised figures also reveal that supply is expected to grow by just four per cent this year and by 4.9 per cent in 2011.

Meanwhile, the total supply from the ANRPC regions is also expected to grow faster at 6.6 per cent this year, as against 5.3 per cent anticipated earlier. The upward revision has been mainly prompted by Indonesia, which reported a 33 per cent growth in rubber production in the third quarter as against an anticipated growth of 4.7 per cent. The output for Q4 is expected to jump by 18.6 per cent, making a marked recovery from the 1.9 per cent expected earlier.

The price boom seems to have tapped into the large number of dormant trees bringing old and neglected trees into productive operations and the country’s production is expected to grow by 16.9 per cent to 2.85 million tonnes. However this accelerated pace of growth in Indonesia is not likely to be sustained into the coming years.

Unusually heavy rains and floods during the first half of November have affected the supply of rubber from Thailand, especially from South Thailand which accounts for 80 per cent of the country’s natural rubber output.

Reports from the Rubber Research Institute of Thailand indicate that an estimated 18,000 hectares of rubber area has been flooded and 15,600 hectares have been damaged by heavy winds. As a direct consequence, natural rubber supply from Thailand is expected to fall by 1.4 per cent to 3.12 million tonnes this year.

Malaysia too has scaled down its production growth to 13.2 per cent to 0.97 million tonnes this year, as against a production growth of 16.7 per cent and one million tonnes production expected earlier. Even this projection seems over optimistic given the severe monsoon rains which lashed the rubber growing regions of the country even in early November, ANRPC observed.

China’s stringent fight against inflation could temper rubber price rise in global markets in the immediate future. Although the import of natural rubber and compound rubber into China are expected to be high during the third and fourth quarter of current year, the actual rubber consumption by the Chinese economy are expected to be much lower during the period.