Outlook for the rubber industryOutlook for the rubber industry
International Smallholder Rubber International Smallholder Rubber ConferenceConference
Phnom Penh, CambodiaPhnom Penh, Cambodia24 June 200924 June 2009
Panel 4 : ProspectsPanel 4 : Prospects
Prepared by the Secretariat of the Prepared by the Secretariat of the International Rubber Study GroupInternational Rubber Study Group
Presentation content
The world economy, the IMF scenarioThe vehicle sectorThe tyre sectorLong-term aggregate rubber demand forecastsNatural rubber supply potentialNatural and synthetic rubber demandThe effect of alternative economic growth scenarios
Economic developments
Economic activity is represented by Gross Domestic Product (GDP) IRSG uses data from IMFIRSG forecasts for 2009 to 2014 are taken from the IMFIMF published data/forecasts in April 2009Forecasts for later years are based on IRSG model
World GDP growth, July 2008 and April World GDP growth, July 2008 and April 2009: recession hits earlier2009: recession hits earlier
-2-1012345678
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
%
data forecasts July 2008 forecasts April 2009
The vehicle sectorThe vehicle sector
Passenger car productionPassenger car production
0102030405060708090
1975 1980 1985 1990 1995 2000 2005 2010 2015
mill
ions
production Jul-08 Apr-09
Commercial vehicle productionCommercial vehicle production
0
5
10
15
20
25
30
1975 1980 1985 1990 1995 2000 2005 2010 2015
mill
ions
production Jul-08 Apr-09
Growth in vehicle production
% growth
Passenger cars
Commercial vehicles
2006 6.3 0.42007 5.8 4.52008 -1.3 -6.62009 -22.4 -20.12010 3.6 7.62011 22.3 12.82015 14.3 10.72018 -3.4 -5.8
The tyre sectorThe tyre sector
Tyre sectorTyre sector
Tyre sales is the sum ofTyre sales is the sum of original equipment (OE) tyre sales, determined original equipment (OE) tyre sales, determined
by the number of vehicles producedby the number of vehicles produced replacement (RP) tyre sales, determined byreplacement (RP) tyre sales, determined by
the number of vehicles on the roadthe number of vehicles on the road
Passenger car tyre sales,Passenger car tyre sales,original equipmentoriginal equipment
050
100150200250300350400450
1975 1980 1985 1990 1995 2000 2005 2010 2015
mill
ions
sales Jul-08 Apr-09
Passenger car tyre sales,Passenger car tyre sales,replacementreplacement
0
200
400
600
800
1000
1200
1975 1980 1985 1990 1995 2000 2005 2010 2015
mill
ions
sales Jul-08 Apr-09
Passenger car tyre sales,Passenger car tyre sales,totaltotal
0
200
400
600
800
1000
1200
1400
1600
1975 1980 1985 1990 1995 2000 2005 2010 2015
mill
ions
sales Jul-08 Apr-09
Commercial vehicle tyre sales,Commercial vehicle tyre sales,original equipmentoriginal equipment
0
20
40
60
80
100
120
140
1975 1980 1985 1990 1995 2000 2005 2010 2015
mill
ions
sales Jul-08 Apr-09
Commercial vehicle tyre sales,Commercial vehicle tyre sales,replacementreplacement
0
100
200
300
400
500
600
1975 1980 1985 1990 1995 2000 2005 2010 2015
mill
ions
sales Jul-08 Apr-09
Commercial vehicle tyre sales,Commercial vehicle tyre sales,totaltotal
0
100
200
300
400
500
600
700
1975 1980 1985 1990 1995 2000 2005 2010 2015
mill
ions
sales Jul-08 Apr-09
Growth in tyre production
% growth
Passenger car tyres
Commercial vehicle tyres
2006 0.8 3.72007 5.9 5.62008 -0.4 0.22009 -6.4 -3.82010 -3.4 4.52011 4.5 5.42015 8.7 7.62018 0.4 0.8
Long-term aggregate rubber Long-term aggregate rubber demand forecastsdemand forecasts
Aggregate rubber demandAggregate rubber demand
Aggregate rubber demand in the tyre Aggregate rubber demand in the tyre sector; influencing factors are tyre sector; influencing factors are tyre production and rubber production and rubber weight per tyreweight per tyre
Aggregate rubber demand in the general Aggregate rubber demand in the general rubber goods sector; influencing rubber goods sector; influencing factor is economic developmentfactor is economic development
Rubber consumption Rubber consumption 2018:2018: tyres 16.5, GRG 11.2, total 27.7 tyres 16.5, GRG 11.2, total 27.7
0
5
10
15
20
25
30
35
1975 1980 1985 1990 1995 2000 2005 2010 2015
mill
ion
tonn
es
tyres Jul-08 tyres May-09 GRG Jul-08GRG May-09 total Jul-08 total May-09
World rubber consumption(‘000 tonnes)
Total rubber
volume % growth
2006 21,810 4.02007 23,045 5.72008 22,299 -3.22009 20,817 -6.62010 21,392 2.82011 22,502 5.22015 27,118 6.12018 27,669 0.7
Modelling natural rubber Modelling natural rubber supply potentialsupply potential
Natural rubber supply potentialNatural rubber supply potential
About 85% of natural rubber is About 85% of natural rubber is produced by smallholdersproduced by smallholders
Production capacity suitable concept Production capacity suitable concept for synthetic rubber, but not for natural for synthetic rubber, but not for natural rubberrubber
A general framework for natural A general framework for natural rubber supplyrubber supply
The trend in production will be called The trend in production will be called normal productionnormal production
Production exceeds normal production Production exceeds normal production at high pricesat high prices
And vice versaAnd vice versa
The vintage approach derives and The vintage approach derives and includesincludes
The composition of the total area for The composition of the total area for natural rubber according to the year of natural rubber according to the year of planting (the planting (the vintagesvintages))
The average The average yield profileyield profile for a hectare for a hectare of rubber during its lifeof rubber during its life
Technical progress in quality of clones Technical progress in quality of clones affecting yield profiles of hectares affecting yield profiles of hectares planted in various yearsplanted in various years
18 April 200918 April 2009
Projections up to 2018 depend Projections up to 2018 depend on planting policieson planting policies
Natural rubber productionNatural rubber productionThailandThailand
0
500
1000
1500
2000
2500
3000
3500
4000
1975 1980 1985 1990 1995 2000 2005 2010 2015
'000
tonn
es
data normal production
Natural rubber productionNatural rubber productionIndonesiaIndonesia
0
500
1000
1500
2000
2500
3000
3500
4000
1975 1980 1985 1990 1995 2000 2005 2010 2015
'000
tonn
es
data normal production
Natural rubber productionNatural rubber productionMalaysiaMalaysia
0200400600800
10001200140016001800
1975 1980 1985 1990 1995 2000 2005 2010 2015
'000
tonn
es
data normal production
Natural rubber productionNatural rubber productionIndiaIndia
0
200
400
600
800
1000
1200
1975 1980 1985 1990 1995 2000 2005 2010 2015
'000
tonn
es
data normal production
Natural rubber productionNatural rubber productionVietnamVietnam
0100200300400500600700800900
1000
1975 1980 1985 1990 1995 2000 2005 2010 2015
'000
tonn
es
data normal production
Natural rubber productionNatural rubber productionChinaChina
0
100
200
300
400
500
600
700
800
1975 1980 1985 1990 1995 2000 2005 2010 2015
'000
tonn
es
data normal production
Natural rubber productionNatural rubber productionSri LankaSri Lanka
020406080
100120140160180
1975 1980 1985 1990 1995 2000 2005 2010 2015
'000
tonn
es
data normal production
Natural rubber productionNatural rubber productionCambodiaCambodia
020406080
100120140160180200
1975 1980 1985 1990 1995 2000 2005 2010 2015
'000
tonn
es
data normal production
Global NR normal production to reach Global NR normal production to reach 13.0 million t. by 2018; actual production 13.0 million t. by 2018; actual production
higher or lower depending on priceshigher or lower depending on prices
0
2000
4000
6000
8000
10000
12000
14000
1975 1980 1985 1990 1995 2000 2005 2010 2015
'000
tonn
es
data normal production
Confronting supply potential and Confronting supply potential and demand at 2008 market sharesdemand at 2008 market shares
The marketThe market
Forecasts for consumption of rubber Forecasts for consumption of rubber (a(already presented)lready presented)
Production potential of natural rubber Production potential of natural rubber (a (already presented)lready presented)
How do these compare?How do these compare?
What are the determining What are the determining factors driving the share of NR factors driving the share of NR
in total rubber consumptionin total rubber consumption
In broad terms:In broad terms:• Technology: shares may depend on the Technology: shares may depend on the
country or the factorycountry or the factory• Composition of the end-uses: cv tyres use Composition of the end-uses: cv tyres use
more NR than pc tyresmore NR than pc tyres• Price ratio of NR over SRPrice ratio of NR over SR
Rubber prices and oilRubber prices and oil
Explaining developments in NR Explaining developments in NR pricesprices
Analysis based on market Analysis based on market equilibrium: equilibrium:
supply and demandsupply and demand
Explaining developments in Explaining developments in SR pricesSR prices
Modelling prices of SBR using prices of Modelling prices of SBR using prices of styrene, butadiene and NR and GDP:styrene, butadiene and NR and GDP:
a good fita good fit
0.90
1.10
1.30
1.50
1.70
1.90
2.10
2.30
2.50
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
US$
/kg
data model
Projections of prices of oil Projections of prices of oil are given below.are given below.
The price of oil to level off at around The price of oil to level off at around US$80/barrel and then declineUS$80/barrel and then decline
0
20
40
60
80
100
120
140
1990 1995 2000 2005 2010 2015
US$
/bar
rel
data Jul-08 Apr-09
The IRSG makes and needs The IRSG makes and needs price forecasts for NR and SR price forecasts for NR and SR in interaction with production in interaction with production and consumption forecasts. and consumption forecasts.
The IRSG is not allowed to The IRSG is not allowed to publish these forecasts.publish these forecasts.
NR share in consumptionNR share in consumption
3839404142434445464748
1995 2000 2005 2010 2015
%
share 43% forecast 46%
Rubber consumption Rubber consumption 2018:2018: NR 12.8, SR 14.9, total 27.7 NR 12.8, SR 14.9, total 27.7
0
5
10
15
20
25
30
35
1975 1980 1985 1990 1995 2000 2005 2010 2015
mill
ion
tonn
es
NR Jul-08 NR May-09 SR Jul-08SR May-09 total Jul-08 total May-09
World natural rubber consumption(‘000 tonnes)
Consumption NR
volume % growth
2006 9,243 1.82007 9,884 6.92008 9,726 -1.62009 9,232 -5.12010 9,703 5.12011 10,263 5.82015 12,313 6.12018 12,809 1.3
Consequences of alternative GDP scenarios
Base: GDP scenario as described aboveOptimistic scenario: higher growth than in the base scenarioPessimistic scenario: lower growth than in the base scenario
Growth in world GDP,alternative scenarios
-3-2-10123456
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
%
data base optimistic scenario pessimistic scenario
NR consumption 2018:NR consumption 2018:between 12.6 and 13.0 million tonnesbetween 12.6 and 13.0 million tonnes
6789
101112131415
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
mill
ion
tonn
es
data base optimistic scenario pessimistic scenario
The role of the IRSG
The IRSG is the only public organisation providing appropriate forecasts for the rubber industry. This is most important in the current uncertain situation. The IRSG needs support and membership from all governments and industries involved in rubber and rubber products in order to be able to provide this service for optimal public and private planning .
Thank you!