Kuala Lumpur, Malaysia – World supply of natural rubber should fall short of demand in 2017, according to the April 2017 issue of Natural Rubber Trends & Statistics, the official publication of the Association of Natural Rubber Producing Countries (ANRPC).
The ANRPC projects total world NR supply in 2017 at 12.27 million tonnes, including 11.17 million tonnes from the association's 11 Southeast Asian member countries, 177,000 tonnes from Brazil and 924,000 tonnes from other countries, according to the April issue.
This represents a 5.7% increase in supply over 2016, the ANRPC said. However, this still won't be enough to meet this year's demand, which will rise 1.8% to 12.82 million tonnes, it said.
The NR market has been dominated by reports of oversupply over the past couple of years, thanks to large-scale planting of Hevea brasiliensis trees beginning in 2010, according to the preface to the April 2017 issue by ANRPC Secretary General Nguyen Ngoc Bich.
"In this context, ANRPC has made a scientific assessment of the area to be newly opened for tapping during all the years from now," Bich wrote. "Along with this, we have accounted the acreage of trees cut down for replanting and also the acreage discarded or perished."
This assessment led the ANRPC to project a supply shortfall, according to Bich. This shortfall is expected to widen to 688,000 tonnes in June 2017 before narrowing to 46,000 tonnes in December, he said.
"The current phase of low rubber prices is largely a manifestation of a downtrend prevailing in all commodities, rather than a phenomenon specific to rubber," Bich said.
An anticipated upward revision of US policy market rates in June 2017 have caused investors to switch from commodities to US Treasury bonds, he said.
The International Monetary Fund anticipates an average 18% increase in commodity prices in 2017 over 2016, according to Bich. However, the strength of the US dollar impedes any price increases in NR, and the dollar is likely to stay strong unless the US government intervenes to weaken it, he said.
ANRPC member countries exported a total of 2.99 million tonnes of NR during January-April 2017, compared with imports of 2.12 million tonnes, the association said. Exports climbed 7.1% and imports 3% during the period, it said.