Natural rubber prices likely to remain volatile<\/p>\n
SINGAPORE (Reuter): Natural rubber prices are likely to remain
\nvolatile as tight supplies, falling stocks, weather disruptions
\nand unpredictable buying by China haunts the market, an official
\nof U.S. trader Cargill said yesterday.<\/p>\n
Michael Coleman, managing director of Cargill Asia's rubber
\nand latex product line, told a tire conference in Singapore that
\ncompanies needed to manage risks and adjust to dislocations in a
\nmarket where the balance between supply and demand was tight.<\/p>\n
"The outlook, then, over the long term is for high levels of
\nprice volatility to continue," Coleman said.<\/p>\n
"I see natural rubber prices higher," he said when asked about
\nhis long-term outlook. He added, however, that synthetic rubber
\nwould moderate any sharp increases in prices as an alternative
\nsource of supply to natural rubber.<\/p>\n
Cargill estimates world production of natural rubber this year
\nwill reach 6.054 million tons against estimated consumption of
\n6.065 million tons. Output in 1997 is forecast at 6.175 million
\ntons, virtually matching consumption of 6.174 million tons.<\/p>\n
Coleman said governments of rubber-producing nations and the
\nInternational Natural Rubber Organization (INRO) will have
\nlimited clout in stamping out wild swings in prices.<\/p>\n
INRO, which groups major natural rubber producing nations,
\nmaintains a rubber buffer stock and supports a range for rubber
\nprices.<\/p>\n
Coleman said INRO's ability to prop up a price range "has been
\nseverely weakened" over the past two years.<\/p>\n
World stocks of natural rubber at the end of 1996 would slide
\nto 1.76 million tons from 1.771 million last year. In 1997, they
\ncould reach 1.759 million tons, he added.<\/p>\n
"The availability and price of synthetic rubber will play an
\nincreasingly important role in natural rubber price formation and
\nvice versa," Coleman said.<\/p>\n
Unpredictable bouts of buying by China, the world's second
\nbiggest consumer, unusual weather such as heavy rains in rubber
\ngrowing areas in southern Thailand and northern Malaysia and the
\ngrowing price sensitivity of supplies would add to market
\nvolatility, Colemen said.<\/p>\n
Clouding the supply picture was falling natural rubber output
\nin Malaysia, where production slid to 1.0 million tons in 1995
\nfrom 1.6 million tons in 1988, he added. Thailand also faced the
\nsame prospect, he said.<\/p>\n
Rapid economic growth in both countries has raised the cost of
\nrubber production while providing alternative employment
\nopportunities to thousands of small farmers if prices fall.<\/p>\n
Coleman said the center of natural rubber production would
\nshift to south Sumatra and Kalimantan in Indonesia southern
\nThailand and northern Malaysia, now the leading producers.<\/p>\n
He saw Indonesia's production swelling to 3.7 million tons in
\n2020 from 1.45 million tons in 1995.<\/p>\n
Malaysian output would slide to only 500,000 tons in 2020 from
\nthe current 1.09 million tons while that of Thailand would fall
\nto 1.3 million tons from 1.8 million tons last year, he said.<\/p>",
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