The Condition and Outlook of World Natural Rubber Supply and Demand
Mr Salvatore PinizzottoInternational Rubber Study Group (IRSG)
16th Shanghai Derivatives Market Forum 29th May 2019
Shanghai – P.R. China
About International Rubber Study Group (IRSG)
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Who are we? Established in 1944 as an inter-governmental
organisation, headquartered in London, UK As of July 2008, the Group has been based in
Singapore. IRSG is the forum for discussion of matters
affecting the supply and demand for natural as well as synthetic rubber.
Authoritative source of statistical data and analysis for all aspects of the rubber industry.
IRSG has 36 member countries.
IRSG has a network of more than 100 Industry Members
IRSG is the Global Platform for the Rubber Sector
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Consumers
Producers
Governments
Associations/Organisations
IRSG
Processors
Traders / Financial Institutions
R & D/ Universities
Agenda
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▹ Current Growth Scenario
▹ Facts and Fundamentals
▹ Future Growth and Strategies ▹
Global economic growth at 3.3% . Growth momentum is slowing and risk rising.
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World
ChinaUSA
Euro Area
India
Source: IMF
Source: World Economic Forum
35.2%
17.9%
8.6% 7.9%
2.5% 2.0% 1.8% 1.7% 1.6% 1.2%
China and the United States account for over half of global growth
Purchasing Managers’ Indices indicate softening demand and exports from Asia
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40.0
42.0
44.0
46.0
48.0
50.0
52.0
54.0
56.0
58.0
Apr-18 Jul-18 Oct-18 Jan-19 Apr-19
China EU US
8
-2000
-1000
0
1000
2000
3000
4000
5000
6000A
pr-0
9A
ug-0
9D
ec-0
9A
pr-1
0A
ug-1
0D
ec-1
0A
pr-1
1A
ug-1
1D
ec-1
1A
pr-1
2A
ug-1
2D
ec-1
2A
pr-1
3A
ug-1
3D
ec-1
3A
pr-1
4A
ug-1
4D
ec-1
4A
pr-1
5A
ug-1
5D
ec-1
5A
pr-1
6A
ug-1
6D
ec-1
6A
pr-1
7A
ug-1
7D
ec-1
7A
pr-1
8A
ug-1
8D
ec-1
8A
pr-1
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$/To
nne
NR-SR Spread NR-SGX TSR20 SBR-Asia BD-Asia
Rubber Price Relationship
World Supply of Rubber 9
Natural Rubber: 48% Synthetic Rubber: 52%
Source: SR capacity IISRP, 2018
Asia Ex China29%
China27%
North America
16%
EMEA16%
Russia8%
LA4%
Asia Ex China China North America EMEA Russia LA
Natural Rubber - Supply Chain Facts
▹ Above 12 million ha area (estimated)
▹ Production is predominantly from South-East Asia
▹ Around 90% of holding units and 85%production are from smallholdings
▹ Average size of holdings varies from 0.5 ha- 10 ha (depending on country definition)
▹ Wide variation in smallholders’ productivity across countries
▹ Presence of multiple intermediariesbetween producers and processors
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0 1000 2000 3000 4000 5000
Taiwan, China
Italy
Saudi Arabia
India
Germany
France
Brazil
Singapore
Japan
Russia
South Korea
USA
China
Thailand & Indonesia representing 61% of Global NR Production. China and USA representing 42% of Global SR Capacity
Source: SR capacity IISRP, 2018
World Rubber Production (IRSG)
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World Rubber Consumption (IRSG)
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Global NR Rubber Consumption (IRSG)14
By Country
China 40%
EU-289%
India 8%
USA7%
Japan5%
Indonesia5%
Thailand 5%
Malaysia4%
Brazil3%
S.Korea3%
ROW11%
Tyre 71.4%
GRG28.6%
By Type
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More than 1/3rd of NR Usage in China(KT)
0
1000
2000
3000
4000
5000
6000
2000 2018
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China is the major driver for global NR Consumption and Trade
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More than five fold increase in mixture rubber import from 2015 level with significant decline in TSR (-19%) and RSS (-7%)
0
1000000
2000000
3000000
4000000
5000000
6000000
2010 2011 2012 2013 2014 2015 2016 2017 2018
Tonn
es
China - NR Import Including Mixture Rubber
400110 400121 400122 400129 400280
18 25% increase total rubber area in the last 10 years mainly driven by Mekong Region
0
5000
10000
15000
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017
Mature and Immature area
IM Mature
-20%
-10%
0%
10%
20%
30%
1990 1994 1998 2002 2006 2010 2014 2018
Growth Trend
IM Mature
NR area expansion more than three million ha in the last decade
China Vehicle Sector Slowing Down
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-20%
-10%
0%
10%
20%
30%
40%
50%
60%
0
5000
10000
15000
20000
25000
30000
35000
40000
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027
PC CV PC% CV%
thousands
IRSG Forecast Global Natural Rubber Consumption20
China2017: +6.4%2018: +3.8%2019: +1.6% 2020: +1.6%
World2017: +4.3%2018: +4.9%2019: +2.6% 2020 +2.3%
USA2017: +2.8%2018: +6.9%2019: +2.6% 2020 +0.2%
Europe2017: +4.3%2018: -0.4%2019: +2.3% 2020 +2.3%
India2017: +4.7%2018: +12.1%2019: +8.1% 2020: +4.6%
NR Production, Usage and SD Balance (thousand tonnes)
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-500
-300
-100
100
300
500
700
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
16,000
17,000
18,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
SD Bal (RH scale) Production Consumption
Supply Chain Challenges
22 Customer requirements are changing with technology and mobility changes
Downstream industry focus is to provide solutions than product
Advanced technology to support fuel efficiency, supply chain mapping andprecision farming
Addressing sustainable production andconsumption
Mobility ecosystem responses and sustainable mobility
Alternative raw materials fit in the sustainability agenda
Addressing end of product management &Waste management
NR: Main Concerns and Opportunities
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Robust Increase in rubber area raises concerns on deforestation
Continuing low prices; Impact on smallholders.
Inefficiency in the supply chain & lack of industry-wide reference on cost of production.
Need to find ways to add value to NR.
Extensive use of innovative solutions in rubber plantations.
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WRS 2019 - From Evolution to Revolution New Paths for the Rubber Economy (March 2019)
Key Takeaways
Rubber consumption is growing modestly while NR production intensity is declining despite increase in new tapping area
Demand continues to be driven by emerging market growth and recovery in mature markets
Slowing tyre sales and rubber consumption growth in China. Deceleration has not impacted so far the global growth in medium-term
Mobility and Digitization will drive innovation and disruption in the rubber industry
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Thank you for your kind attention !
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