Global natural rubber market is going through a dull patch of late with no signs of an imminent boom. Natural rubber, being both an agricultural crop and industrial raw material, its demand primarily relies on GDP and industrial production growth, and on supply side, certainly as agricultural commodity, it has a lot to do with planting investments that were committed 5-7 years ago and the weather-induced volatility that drives price actions, says Salvatore Pinnizzotto, Secretary General, International Rubber Study Group (IRSG). In an interview to Rubber Asia, Pinnizzotto touches upon the global NR scenario and sustainability issues in detail. According to him, NR market is likely to remain more or less balanced in the medium term. Excerpts:
Being an expert in analysing global and regional economic trends, what according to you are the latest economic trends both globally and regionally and their possible impact on the demand supply scenario of natural rubber?
Global economy maintains momentum as anticipated by the IMF with the global output projected to grow by 3.5 per cent in 2017 and 3.6 per cent in 2018. Projected global growth rates for 2017–18, though higher than 2016 growth, are below precrisis averages. China’s growth is expected to remain at 6.7 per cent in 2017, the same level as in 2016, and to decline only modestly in 2018 to 6.4 per cent, while growth in India is forecast to pick up. Natural rubber, being both an agricultural crop and industrial raw material, its demand primary relies on GDP and industrial production growth, and on supply side, certainly as agricultural commodity, it has a lot to do with planting investments that were committed 5-7 years ago and the weather-induced volatility that drives price actions. We had a structural bull market for industrial raw materials around industrialization build out of China from 2002 to the middle of 2012. From mid-2012, we had a structural bear market, slowing the Chinese growth, intersecting with the increase in long lead time production growth. Investments in rubber plantation can take several years to bring into production and we have seen plantation investments hitting a slowing China demand.
Do you think that factors other than the fundamentals of demand and supply have a major influence on rubber market? If so please elaborate?
This story is from the September - October 2017 edition of Rubber Asia.
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This story is from the September - October 2017 edition of Rubber Asia.
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