Expert believes “worst is over” for natural rubber market

London - Rubber industry expert Dr Prachaya Jumpasut remains upbeat about the future of rubber saying it will stabilise in the future.

“Are we having a global natural rubber surplus? Yes. But does that mean rubber will not recover from its five years of low? No.

“The truth is that the market will sort itself out. Some big players such as Malaysia have already reduced their plantations and have been replaced by Vietnam. That’s because their economy and their geography cannot support it,” said Dr Jumpasut, the editor of the Rubber Economist.

While expressing optimism over the long-term future of rubber industry, Jumpasut said: “For short term, I think the worst is over. World natural rubber output may have even peaked in the early part of 2014 and the annual growth rate is now declining.

“The output may even show a marginal decline by the end of this year. At the end of the day, demand will always be there with important players being around like China - which has both a huge domestic consumption as well as export-purposed use of the material.”

According to Jumpasut, “the aggregate of world natural rubber and synthetic rubber consumption has been recovering more rapidly than expected and is forecast to increase from 26.75 million tonnes in 2013 to 28.69 million tonnes in 2014. The growth rate of 7.3 percent expected for this year would be the fastest rate since 15.6% was achieved in 2010.”

Meanwhile, the Thai Rubber Association announced on 15 Dec that the Thai government and private operators were jointly launching a 240-million-bhat (€10.1 million) fund to tackle the tumbling prices.

“The fund will purchase rubber in the futures market. The fund is expected to be set up in the next two weeks,” added the report stating that that the purchase of rubber in the futures market would help shore up the sagging rubber price.