Background Competitiveness Analysis and Factors Affecting Trade Flow of Natural Rubber in International Market
2 synthetic rubber as a raw material for various vehicle components, one of which is
tires. The International Rubber Study Group IRSG reports that total synthetic rubber consumption increased by 4.2 from 14.8 million metric tonnes in 2011 to
15.4 million metric tonnes in 2013; the production of synthetic rubber also increased by 2,5. Furthermore, all geographic regions experienced absolute
growths in natural rubber production from 2011 to 2013. Asian natural rubber supply reached 11.2 million tonnes in 2013, while the European Union and North
America were at 0.5 million tonnes and 0.3 million tonnes, respectively, for the same period. Asia is the largest supplier for natural rubber, as well as for synthetic
rubber.
The FPT Securities Joint Stock Company FPTS Vietnam report shows that the price of natural rubber from 2011 to 2014 faced high volatility Figure 1. In
mid-2008, the price of natural rubber continued to increase, reaching its highest peak in the history of natural rubber at that time, at about 3,000 USton. The
increase in price occurred due to the increase in crude oil prices, which is a raw material for synthetic rubber. Synthetic rubber is a commodity, which is, can be
both complementary and a complete substitute for natural rubber so that when the price of synthetic rubber rose, it indirectly contributed to the increase in the price
of natural rubber in the international market. At the end of 2008, the price of Table 1 Worldwide Production and Consumption of Natural and Synthetic Rubber
000 mt
2011 2012
2013 NATURAL RUBBER PRODUCTION
Asia-Pacific 10456
10798 11211
EMEA 471
494 510
Americas 303
312 320
TOTAL 11230
11604 12041
NATURAL RUBBER CONSUMPTION
Asia-Pacific 7555
7948 8261
EMEA 1663
1466 1475
Americas 1769
1667 1661
TOTAL 10987
11081 11397
WORLD SUPPLY-DEMAND SURPLUSDEFICIT 243
525 644
WORLD STOCKS
1
1736 2260
2904
SYNTHETIC RUBBER PRODUCTION
Asia-Pacific 7573
7852 8351
EMEA 4218
4175 4189
Americas 3313
3069 2957
TOTAL 15104
15096 15497
SYNTHETIC RUBBER CONSUMPTION
Asia-Pacific 7973
8416 8987
EMEA 3856
3641 3652
Americas 2980
2846 2815
TOTAL 14809
14903 15454
WORLD SUPPLY-DEMAND SURPLUSDEFICIT 296
194 43
WORLD STOCKS
1
4489 4683
4726
SR IN TOTAL RUBBER CONSUMPTION 57.5
57.4 57.6
Source: IRSG, 2014
3 natural rubber deceased because of the global economic crisis that led to the
weakening of the automotive industry, further affecting the natural rubber industry. The real impact on the worlds natural rubber demand resulted in
decreased and led to the declining price trend in the international market at a price range of 1,900 USton in October 2008 and further decreasing with the June
2009 price of natural rubber coming in at only 1,500 USton.
The business results from the 1
st
quarter of 2013 of most companies in the natural rubber industry are significantly lower than the same period of 2012 total
revenue down by 33, profit before tax down by 56 due to lower consumption and lower selling price output down by 24 and price down by 10-14. With
the currently declining rubber price, it indicates that 2013 was a difficult year for companies in the natural rubber industry. The governmenets of Thailand,
Indonesia, Malaysia agreed to reduce the export volume of 300,000 tonnes to manage the decrease in price, an action that helped to prevent an oversupply
situation in 2013 FPTS, 2013.
Source: FPTS, 2013
According to the IRSG, the projection of world demand for natural rubber will reach 10.9 million tonnes by 2020 with an average annual consumption
growth rate of 9, thus there will likely be a rubber shortage when the natural rubber supply is not experiencing high growth over 9. The majority of the
demand for natural rubber is derived from the motor vehicle sector, primarily the tire industry. The largest market country in the world is China, which consumed
more than a third of the global production in 2013. The demand for various other rubber products excluding tires will also increase due to the increasing levels of
industrialization in developing countries.
As shown above, natural rubber is one of the plantation commodities, which plays a major part in international trade. Each manufacturer is competing to utilize
natural rubber commodities as a foreign exchange. Furthermore, the emergences of newly industrialized countries, the improved world economy and the growing
population have led to the development of rubber as a commodity. The benefits of these improvements are not only felt by the main natural rubber producers;
Figure 1 Natural Rubber Price Movement in USTonnes, 2008 - 2012
4 Indonesia, Thailand and Malaysia for example, but also by the importing
countries. Many importing countries require a continuous supply of natural rubber as a
raw material for strategic industries, such as the automotive tire industry, military industrial equipment and industrial medical facilities, among others. Producers
want high prices, while consumers want low prices, therefore the balance between natural rubber production supplied by producer countries and natural rubber
consumption for the needs of the industry in importing countries is critical to the creation of a mutually beneficial price for both countries.