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1
World Rubber Market : Trends and Perspectives
Mr. Salvatore Pinizzotto
Secretary-General
International Rubber Study Group (IRSG)
IISRP 58th Annual General Meeting – Taipei
www.rubberstudy.com
International Rubber Study Group
International Rubber Study Group
Who are we?
Established in 1944 as an inter-governmental organisation,
headquartered in London, UK
As of July 2008, the Group has been based in Singapore.
IRSG is the forum for discussion of matters affecting the supply
and demand for natural as well as synthetic rubber.
Authoritative source of statistical data and analysis for all aspects
of the rubber industry.
IRSG has 36 member countries.
IRSG has around 100 industry members as Associates.
2
International Rubber Study Group
Market Transparency
Statistical Information
International Rubber Study Group
Rubber Statistical Bulletin
World Rubber Industry Outlook
Rubber Industry Report
Monthly Rubber Bulletin
Projects
3
International Rubber Study Group
Market Transparency : Why IRSG?
Reliable forecasting starts with quality data.
The reliability and completeness of data depends largely on
both the country supplying it and the organizations collecting it.
Inconsistent data can lead rubber producers, consumers and
investors to misread the true supply and demand trends,
prompting them to make ill-informed decisions that can
negatively impact the rubber economy.
Increased transparency of data should help to moderate
unwanted price volatility, promote informed investment
decisions and, ultimately, stabilize the rubber market.
IRSG as a Forum
Producers Consumers
Traders
Governments Processors
IRSG
“Change is the law of life. And those who look only to the past or present
are certain to miss the future.”
(John F. Kennedy)
4
Themes
World supply-demand of rubber
Natural rubber land use and supply relationship
Prospects and challenges
5
Natural Rubber Price Relationship
0
1000
2000
3000
4000
5000
6000
7000
Jan '10 Jan '11 Jan '12 Jan '13 Jan-14 Jan-15 Jan-16 Jan-17
NR-SGX TSR20 SBR-USA BD-Asia
Natural Rubber Price Relationship
6
Natural Rubber Price Relationship
Production Capacity
Thailand has 36% NR capacity
while China has 50% SR capacity
of the Asia-Pacific region
93%
5% 3%
NR Capacity
Asia -Pacific EMEA Americas
56% 24%
20%
SR Capacity
Asia -Pacific EMEA Americas
7
Global Natural Rubber Production (KT)
0
2000
4000
6000
8000
10000
12000
14000
2008 2009 2010 2011 2012 2013 2014 2015 2016
Thailand Indonesia Vietnam China India Malaysia
Myanmar Sri Lanka Philippines Cambodia Côte d'Ivoire ROW
Natural Rubber- Supply Chain Facts
• Around 12 million ha area (estimated)
• Production is predominantly from South-East Asia
• Around 90% of holding units and 85% production are from
smallholdings
• Average size of holdings varies from 0.5 ha- 10 ha
(depending on country definition)
• Wide variation in smallholders’ productivity across
countries
• Presence of multiple intermediaries between producer
and processor
8
NR Supply Chain Challenges
• Productivity
• Quality/consistency of raw material
• Rubber area expansion to marginal land
• Price variability
• Cost reduction
Land Use Challenges
Wide spread
rubber
expansion to
marginal
land
Productivity
• older plantations
• labour shortage
• aging farmers
• second generation
abstains from farming
• Climate factors
9
Natural Rubber Supply Relationships
-1000
0
1000
2000
3000
4000
5000
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
1990 1995 2000 2005 2010 2015
US
D/t
on
ne
s
%
Price
NR Area: Trend Across Regions (KHa)
0
2000
4000
6000
8000
10000
12000
14000
2000 2005 2010 2015 2016
Asia-Pacific Africa Latin America
10
NR Area : Land Use Trend (000’ha)
0
2000
4000
6000
8000
10000
12000
14000
1990 1995 2000 2005 2010 2015
Thailand Indonesia Malaysia
Vietnam CAMAL Row
Historically (1990s to mid 2000s), land use changes in Malaysia and Indonesia were in favour of crop shift
towards Oil Palm; however, cyclical new planting investments happened in both traditional/non-traditional
regions.
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
1990 1995 2000 2005 2010 2015
Changes in Mature and Immature Area
IM Mature
Natural Rubber Consumption
72%
13%
15%
Asia -Pacific EMEA Americas
72%
8% 1% 6%
2% 2%
Tyre Hose&Belt
Other GRG Gloves
Thread&Foam Others
Tyre producers purchase about
70% of total natural rubber
placed on the global market
11
Global Natural Rubber Consumption (KT)
0
2000
4000
6000
8000
10000
12000
14000
2008 2009 2010 2011 2012 2013 2014 2015 2016
China EU-28 India USA Japan Indonesia Thailand Malaysia Brazil S.Korea ROW
Natural Rubber Trade
0
500
1000
1500
2000
2500
3000
3500
4000
2008 2010 2012 2014 2016
NR Export
Thailand Indonesia
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2008 2010 2012 2014 2016
NR Import
China
12
Global Natural Rubber Balance (KT)
-600.00
-400.00
-200.00
0.00
200.00
400.00
600.00
800.00
1000.00
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F
Global Average GDP Growth (IMF, %)
-1
0
1
2
3
4
5
6
1990 1995 2000 2005 2010 2015 2020
IMF Oct 2016
13
International Rubber Study Group
IMF Boosts Global Growth Forecast to
3.5% Despite Geopolitical Angst
(WSJ)
‘Sword of protectionism’ hangs over
global recovery, says IMF (FT)
IMF raises China growth outlook but
warns of risk of 'disruptive adjustments‘
(Reuters)
China Vehicles in Use, (millions of units)
0.00
50.00
100.00
150.00
200.00
250.00
300.00
350.00
2000 2005 2010 2015 2020 2025
PC
LCV
M/HCV
14
China Vehicles Production Growth, (%)
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
2008 2010 2012 2014 2016 2018 2020 2022 2024
PC CV
Tyre Production Growth
15
Impact of Area Expansion: Thailand (Ha)
2012 surge in planting reported in Southern region reference to
Agriculture Statistics, Thailand
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
2006 2008 2010 2012 2014 2016 2018 2020
Planted Area (Ha)
South
Central Plain
North East
North
Impact of Area Expansion: Thailand (MT)
Reported 2012 plating surge might result in huge production
increase near to 6 million tonnes by the end of the decade…
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
2006 2008 2010 2012 2014 2016 2018 2020
Production (MT)
South
Central Plain
North East
North
16
Challenges
NR production overcapacity.
Vehicle growth projections in China – are they aligned with
the New Normal economic outlook?
“Regenerated/Reclaimed/Recycled Rubber” in China
reported to be up to 4MMT and backing off virgin rubber
demand.
Prospects
Growing demand but only slow closure of the overcapacity
gap.
Rationalisation and consolidation in the value chain.
Switch from rubber to other agricultural crops – driven by
policies and/or economic reality?
Drive for productivity improvements to help farmers.
Consumption moving towards site of production to minimise
logistics inefficiencies and costs.
17
Thank You for Your Attention
International Rubber Study Group