world rubber market : trends and...

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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


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.

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Market Transparency

Statistical Information


Rubber Statistical Bulletin

World Rubber Industry Outlook

Rubber Industry Report

Monthly Rubber Bulletin

Projects

3


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)

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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


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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


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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

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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

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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%


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

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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

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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

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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

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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

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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

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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.

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Thank You for Your Attention


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