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Market
Production
Consumption
Trade flows
The supply of natural rubber (NR) hinges upon the interplay among several factors, including production capacity, underlying technological change, input and processing costs as well as price differential with synthetic rubber (SR). During 1961-2005, NR production grew on average 3.4% a year. By the early 1960s synthetic rubbers had overtaken natural rubber in volume.
In 2005, the six leading producers -Thailand, Indonesia, Malaysia, India, China and Vietnam - accounted for roughly 89% of world NR production. Combined output in Thailand, Indonesia and Malaysia alone represented around 70% of the global output. Despite the substitution effect with SR, world natural rubber production increased from roughly 2,1 million tonnes in 1961 to over 9,1 million tonnes in 2005. According to IRSG's predictions for 2009, the world's production rise for NR should not overcome 3.6% and 3.5% for SR. As more, Indonesia should stay the most dynamic market with a rise of 6.8%.
NR production (thousand tonnes) - largest producers, 1961-2005
Source: UNCTAD secretariat (Data: FAOSTAT database)
Production in Thailand has been increasing steadily during 1961-2005, from a reported 186,100 tonnes in 1961 to over 3 million tonnes in 2005 (at an average rate of 6.5% per year over the period). It has tended to stabilize for the last two years due to bad weather conditions (heavy rains). Thailand nevertheless remains the world leading NR producing country. Its share of world output has also increased over the years, from as low as 8.8% in 1961 to over 33% in 2005.
Thailand, NR area, production and yields, 1961-2005
Source: UNCTAD secretariat (Data: FAOSTAT database)
Indonesia has become the second largest producer behind Thailand. NR production in Indonesia has been rising during 1961-2005 to reach 2.128 million tonnes by 2005 (+4.8%), at an average rate of 2.6% per year. It should be noticed however that its share of world output has declined slightly over the years, from as high as 32.7% in 1961 to 23.3% in 2005. This was caused by much sharper rise in the output of the largest producing country, Thailand, as well as increases in India and China.
Indonesia, NR area, production and yields, 1961-2005
Source: UNCTAD secretariat (Data: FAOSTAT database)
Malaysia had been the largest NR producing country for most of the 20th century, until it was relegated to third position in the early 1990s. Back in the mid-1970s, Malaysia accounted for almost half of the world's NR output. Following the steady decline in production since the second half of the 1980s, its share dropped to 11.5% in 1999. It has been argued that as the Malaysian economy advanced, the cost of opportunity of producing NR increased. Higher wages in the city attracted workers, which made labour scarce as well as land and capital relatively expensive for NR production.
Malayisa, NR area, production and yields, 1961-2005
Source: UNCTAD secretariat (Data: FAOSTAT database)
Further aspects of natural rubber production (NR planted area; yields; estates versus smallholders; costs of production) have been considered in the crop section.
Rubbers are intermediate goods used in producing final consumer goods (notably tires). In this respect, demand for a specific type and grade of rubber is derived, since it depends on demand for determined final goods, of which rubbers are only one component. General income, expected price of a specific type and grade of NR and of its substitutes, expected price of final goods, as well as relative processing costs for NR and SR can all be regarded as having an impact on NR consumption.
The five largest NR consuming countries
are China, the United States of America (USA), Japan, India, and Malaysia.
World rubber's consumption was of approximately 21 millions of tons
in 2005 (+3,1%). The growth is less significant compare to the last
four years (especially 2003 with a peak of 6%). IRSG estimates that
the world rubber's consumption should rise of 4% per year until 2009
to reach 24.5 million of tons.
China overtook the USA to become the world's top NR consuming country. According to figures from the International Rubber Study Group, NR consumption in China grew quite sharply by an average 12% a year throughout 1998-2005 to reach over 1.8 million tonnes in 2005. High demand for motor vehicles, and hence for tires, stimulated by the stronger economic growth, together with the spike of oil prices which resulted in higher price for synthetic rubber, contributed to the relatively sharp rise in NR consumption in China.
Breakdown of NR consumption by top six consuming countries (%), average 2003-2005
Source:
UNCTAD secretariat (Data: International Rubber Study Group)
* Estimated figures for China
** Figures for NR include the dry rubber content of latex
The USA relinquished its top position in NR consumption since 2001, with continued sharp growth in Chinese rubber consumption and a decline in US consumption (over the 1998-2001 period, -6% per year according to IRSG). As for the other largest consumers, most rubber goes to the tire sector. In the USA, synthetic rubber has traditionally been the major type of rubber consumed.
In Japan, NR consumption allegedly grew during 1998-2005 at the relatively modest rate of 2.8% a year. The decline in the ranking of Japan's rubber consumption was not only a result of the rapid growth of China's rubber industry, but also because of Japanese rubber manufacturers relocating elsewhere.
Total rubber consumption (thousand tonnes) - NR versus SR, 1998-2005
Source: UNCTAD secretariat (Data: International Rubber Study Group)
Synthetic rubbers (SR) overtook NR in production and consumption volume since the 1960s. Growth in natural rubber (NR) usage has been stronger than that of synthetic rubber (SR) for 1998-2005 (a growth rate of 4% -annual average- as compared to 3% for SR). NR consumption indeed grew of 5.5% in 2005 compare to 1.3% for SR consumption, which led to a ratio of 57.7% (the weakest since 1964). Sharply rising oil prices, which may add significantly to the costs of major SR producers, and developments in NR pricing relative to SR (the relative NR/SR % price ratio rose from around 80% to 120% between the start and finish of 2005) have intensified the debate surrounding possibilities for substitution. According to ISRG's, the growth in rubber's consumption predicted until 2009 should be more absorbed by NR (4.7%) than SR (3.6%). The ratio for SR would therefore decrease again to reach 57.2% in 2009.
Share (%) of natural rubber in rubber consumption,
top 10 rubber consumers, 2005
Source: UNCTAD secretariat (Data: International Rubber Study Group)
In China (the largest single consumer of NR), SR consumption increased at an estimated 14% a year over 1998-2005 to reach 2.6 million tonnes by 2005 (up from 1 million tonnes in 1998); NR consumption has been increasing since 1998 at 12% per year, i.e. from 839 thousand tonnes in 1998 up to around 1.8 million tonnes in 2005.
As mentioned in the uses section, technical requirements is an important reason for using NR over SR in many applications. The reader is referred to that section for an overview of the relative share of NR and SR in tire versus general rubber goods manufacturing.
NR
exports
Thailand is the largest exporter. Following the trend of production, Thai NR exports increased at about 7% per year during 1961-2004 to reach around 3 million tonnes in 2004 (from as low as 184,500 tonnes in 1961). In 2004, NR exports from Thailand accounted for 40% of the world total as compared to 8% in 1961.
NR exports (thousand tonnes), 1961 - 2004
Source:
UNCTAD secretariat (Data: FAOSTAT database)
* Figures for NR include: NR latex; dry NR; and natural gums
** China: China; China, Hong Kong SAR; and China, Macao SAR
Indonesian NR exports also paralleled trends in production (exports have increased on average by 2% per year during 1960-2004). In the 1990s Indonesia's share of world exports reached its highest peak during the Asian financial crisis in 1998 at 31% (the reason behind the relatively sharp rise in Indonesian exports during this period was identified in the relatively weak currency). Over 1999-2004, Indonesia accounted for an average 26% of world exports.
Malaysian NR exports have declined in both absolute and relative terms. In 2003, NR exports dropped to about 946 thousand tonnes or 14% of the world total in 2003, compared with 1.66 million tonnes and more than 50% in 1977. This sharp decline in exports follows the trend in production. It should be stressed also that an increasing share of the declined rubber output has been consumed domestically. Malaysia reported a stronger export performance in 2004 (52% increase over the previous year), which may suggests a partial reversal of the downward trend.
It is interesting to note Vietnam emerging as an exporter of some note.
Breakdown of exports by countries (%), average 1999-2004
Source:
UNCTAD secretariat (Data: FAOSTAT database)
* Figures for NR: NR latex; dry NR; and natural gums
In terms of NR exports by type (dry NR versus NR latex), in Indonesia, Malaysia and Thailand the share of dry rubber to all shipments was 99%, 92% and 81%, respectively (average during 1999-2004).
NR exports by types (million tonnes), average 1999-2004
Source: UNCTAD secretariat (Data: FAOSTAT database)
For all major exporters, available trade data show an increase in technically specified rubber (TSR) at the expense of sheet grades (RSS) and latex. According to some estimates from the IRSG (RIR, March 2004), in Indonesia the share of TSR exports to all shipments increased significantly (from 41% to 96%) during the period 1973-2003, while the shares of RSS and latex declined to 3% and less than 1%, respectively. Malaysia also behaved in a similar way (according to IRSG, the shares for 2003 would be 91% for TSR, 8% for latex and 1% for RSS). In Thailand, RSS exports relative to all shipments declined from 84% to 47% during the period 1973-2003; over the same period, the shares of TSR, latex and others would have risen to 34%, 15% and 4%, respectively. The share of RSS in Thailand remains remarkably high compared to Malaysia and Indonesia. This may be partly due to the fact that most NR in Thailand is produced by smallholders.
NR imports
Mainland China emerged in 2003 as the world's largest natural rubber importer and kept its leading position with NR imports reaching more that than 1.4 million tonnes in 2004, nearly 32% more than in 2002. This increase was fuelled by ongoing growth in demand for automobiles coupled with stagnation in domestic natural rubber production. In Malaysia there has been a rise in imports as a result of the rapid growth in domestic demand for NR combined with a decline in domestic NR production.
Breakdown of imports by major importing countries (%), average 1999-2004
Source:
UNCTAD secretariat (Data: FAOSTAT database)
* Figures for NR include: NR latex; dry NR; and natural gums
** China: China; China, Hong Kong SAR; and China, Macao SAR
Most NR trade is still interregional (from South-East Asia to North America and Europe), although the increasing consumption of South-East Asian NR in Asia is enhancing the share of that region.
Selected export flows (kg) by destination, average 2000-2004
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Source: UNCTAD secretariat (Data: Comtrade)
