IRSG warns about global rubber oversupply

Guangdong, China –In a number of years from now there will be an oversupply situation, and the year 2020 will see a 1 million tonne natural rubber surplus and a 3 million tonne synthetic rubber surplus, according to Stephen Evans, secretary general of International Rubber Study Group (IRSG).

Global consumption of natural and synthetic rubber, pegged at 12.3 and 16.8 million tonnes respectively in 2015, up 3.1 percent and 0.9 percent from 2014, is projected to reach 15 and 19.4 million tonnes in 2020.

“Lack of economic growth is one reason for the under-consumption,” said Evans at the 2015 China Rubber Conference in Guangzhou. “Recovery from the financial crisis has not fully happened.”

He added: “If crude oil prices stayed down, it would add some stimulus,” increasing total global rubber consumption by 0.5 million tonnes in 2020.

Evans also raised concerns about upstream and downstream challenges. For producers, those challenges include farmers’ financial reward and lack of inward investment for natural rubber, and inadequate competitive chemical feedstock supply and bio-sourcing for synthetic rubber.

Problems facing consumers include stable prices, raw material recovery from end of life rubber products, and legislation to encourage innovation ability down the value chain.

Besides capacity and planted area expansion, Evans believes excess natural rubber inventory in both producing and consuming countries has an impact on the industry in the shorter term, while longer term factors include recycling, shale gas access in china, climate change and competition for labor and land in Southeast Asia poses.

Evans also believes with limited local natural supply in major consumer countries – China and India – and new synthetic rubber capacity expansion in both countries, synthetic rubber may become the strategic product of choice.