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Note: *[4] from average NR price of SIR20, SMR20, STR20 and RSS3
Table 10. RSS3 price on TOCOM and physical average price
III. Regional Rubber Prices Movements and ConcernsIII. Regional Rubber Prices Movements and Concerns
MovementMovement
20
20406080
100120140160180200220
95 96 97 98 99 00 01 02 03 04 05 06
US Cents/kg
20406080100120140160180200220240260
Yen/kg
Physical Price Average (US Cents/kg) TOCOM RSS 3 (Yen/kg)
-12.41%
30.61%
-15.18%
30.03%
Source: IRCo
Figure 10. RSS3 price on TOCOM and physical average price
21
19951995: Tight regional supply due to heavy rainfall and floods and high overseas demand
19961996: Increased supply and surplus in China, high unemployment in Europe, and slack automobile market and troubled tire industry
19971997: Cheaper Indonesian natural rubber, 13,000 workers struck at Goodyear Tire and Asian economic crisis in the mid - year
19981998: Increased supply, economic slowdown in Asia, weak Ringgit, INRO Council agreed to dispose 55,000 tons per quarter
19991999: INRO liquidated its stocks, soft demand, aggressive offers of exporters
20002000: (Unusual phenomenon) oil price climbed to US$37.15, highest Nymex record in the last 10 years, heavy floods in the South of
Thailand and Peninsular Malaysia, output down by 30-50%
20012001: Continuous rain reduced supplies by 30-40%, INRO completely liquidated all its stocks, and signing of Bali Declaration
by Thailand, Indonesia and Malaysia to cut back production by 4% and exports by 10% beginning 2002
Source: IRCo
22
20022002: Tight supply, the news of delayed shipments, strengthening of Rupiah, Thai Baht, low rubber stocks at Japanese warehouses,
and establishment of International Rubber Consortium Limited( IRCo)
20032003: Tight supply due to rain, low Chinese and Japanese stocks, and unfavorable weather caused raw material shortage, strong
buying interest from China and tire-makers and futures markets
20042004: Shortage of supplies during wintering season, China announced that it would increase consumption by 130,000 tons,
active rubber futures markets, crude oil prices on Nymex surged over US$50 a barrel, strengthening Thai Baht and Rupiah, active buying activities from China and tire-makers, and Tsunami on 26
December caused worries over tight supplies
20052005: Tight supplies, strong demand from major tire-makers, low stocks in China and Japan, hike in oil prices to US$70.85 a barrel
on 29 August, floods in the South of Thailand and Malaysian Peninsular, and typhoon Damrey hit Hainan on 26 September
Source: IRCo
23
20062006: Global economy remained firm, supply and demand looked balanced but the rubber price shot up to the peak in early July due to high speculation and over-bought, especially on TOCOM. The rubber price fell to the floor in late November before rebounding
afterwards. We saw delayed shipments of exporters in the first half of the year and defaults in taking delivery of buyers in the second
half of the year
20072007: firm global economy, tight supplies during Jan – May, Floods in Northern Sumatra in Indonesia and Souhthern Malaysia, early
wintering in Southern Thailand was expected to reduce production by around 30 – 40 percent, strengthening of regional currencies and the China’s yuan, China has changed its strategy to buy from hand-
to-mouth, TOCOM is less aggressive than last year.
Source: IRCo
24
Movement (con’t)Movement (con’t)
The FallThe Fall: came from (1995 – 2001)
• Less bargaining power of NR producing countries despite firm global economy
• Asian economic crisis in mid-1997
The RiseThe Rise: has come from (2002 – the present)
• The global economy has rebounded to the present
• The China factor
• Establishment of Tripartite rubber cooperation among Thailand, Indonesia, Malaysia
Source: IRCo
25
ConcernsConcerns
• Economic imbalance between the U.S. and China will decelerate the global economic growth
• Possibility of China’s economic bubble if the government cannot administer the fiscal and financial policies efficiently and
effectively
• High oil prices will decelerate the global economic growth
• Strong influence on rubber futures by hedge funds will remain
• Imbalance of rubber supply and demand might be seen
• Geopolitical confrontation will be more severe and will be a bearish factor for the rubber industry
• Global climate change will affect the NR production pattern
Source: IRCo
26
How to get rid of these concernsHow to get rid of these concerns
Strategies:-Strategies:-
• Manage NR supply to meet its demand at a remunerative and sustainable price for both producers and consumers through
“The Tripartite Rubber Council: ITRC.”
Source: IRCo
• To manage NR marketing and to stabilize rubber prices by regional cooperation through “International Rubber
Consortium Limited: IRCo”
27
Thailand
MalaysiaIndonesia
Rubber Auction Market Networking
Buyers
Products: RSS3, STR20, SIR20, SMR20
Source: IRCo
• To strengthen physical rubber markets by establishing “rubber auction markets and their networks” among the ITRC
28
Strategies:- (con’t)Strategies:- (con’t)
• Encourage domestic rubber investment to create value-added rubber products
• ITRC’s governments have to invest in Human Resource Development (HRD) to increase rubber productivity, to lower
cost of production, and to improve rubber technologies
• MIS of IRCo
Source: IRCo
29
MIS of IRCoMIS of IRCoRubber Database storing on IRCo’s Website 2007
Supply Demand Prices Stocks OthersProduction
CostsEconomy Finance
- Text- Graphic- Multimedia- Statistics
Data Processing by Computer Softwares
Analytical Reports
2008
NR, SR, ForecastSMS, AETS, SMO
TireAutomobile
Relevant reports, articles, proceedings, etc
GovernmentsIRCoITRC
NTRCs Indonesia
Malaysia
ThailandBoDs
Shareholders
CSMO
Management Office
Vietnam
Indonesia
Malaysia
Thailand
Vietnam
Source: IRCo
30
IV. Regional Markets for Industrial Rubber ProductsIV. Regional Markets for Industrial Rubber Products
Table 11. Demand in Tire and non – Tire, 1995 – 2035
Figure 11. Demand in Tire and non – Tire, 1995 – 2035
0
5
10
15
20
25
30
35
40
1995 2000 2005 2010 2015 2020 2025 2030 2035
(Mill
ion
Ton
s)
Tire Non-Tire Total
Source: LMC
32
ConclusionConclusion
• Asia-Pacific will be the biggest rubber consumers, especially China and India because of an increase of domestic demand in vehicles. Asia-Pacific will the major production bases of tires and non-tire
goods for the global market
• Demand of rubber in the region will grow by 9.06 % during 2010 – 2035 as compared to 3.92 % during 1995 – 2006 that means the world
needs additional 14.72 million tons of rubber in 2035
• Regional rubber prices in the future will depend on the global economic and population growth, energy prices and demand and
supply of natural rubber (NR), and the cooperation among rubber producing countries. For this reason, NR producing countries have to
manage its supply efficiently to prevent any surplus of NR in the rubber market
• Regional markets for industrial rubber products for both tire and non-tire sectors will rise at a regressive rate due to substitution of