Current Developments in the World Rubber

Industry: Rubber Scenario-What Lies Ahead?

Prepared by the IRSG Secretariat

www.rubberstudy.com

Indian Rubber Meet

10-11 March 2016

International Rubber Study Group

Challenges

Removal of inventory overhang from the market.

NR production overcapacity.

SR production overcapacity

Vehicle growth projections in China – are they credible under the

New Normal economic outlook?

Natural Rubber Production

4%

93% 3%

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Kg

/ha

Productivity

Production

Total Natural Rubber Area (KHa)

0

2000

4000

6000

8000

10000

12000

14000

1990 1995 2000 2005 2010 2015

Thailand Indonesia CLMV Row

First surge in planting 2005-2008 ….second surge in 2010-12

NR Supply Chain Challenges

• Productivity

• Older plantations, labour

shortage, aging farmers/second

generation abstains from farming

• Quality/consistency

• Wide spread rubber expansion to

marginal land

• Price variability

• Cost reduction

Older plantations

Aging farmers Quality/consistency

Natural Rubber Consumption

72%

13%

15%

Asia -Pacific EMEA Americas

• Tyre producers purchase about 70% of total natural rubber

placed on the global market

China Vehicles Production Growth, (%)

Rubber Demand

Cheap fuel encourage grater distance driven…..boost for replacement tire

demand

Source: US Department of Transportation

Global Natural Rubber Scenarios, (KT)

Natural Rubber Supply Relationships

Global Synthetic Rubber Production, (KT)

Global Synthetic Rubber Consumption, (KT)

Global Synthetic Rubber Scenarios, (KT)

Prospects

Growing demand but only slow closure of the overcapacity gap.

Rationalisation and consolidation in the value chain.

Switch from rubber to other agricultural crops – driven by policies

or economic reality?

Drive for productivity improvements to help farmers.

Consumption moving towards site of production to minimise

logistics inefficiencies and costs.

NR

SR Downstream user

Sustainable sourcing Consumer/Stakeholder demand

Communication + transparency + ……

Thank You for Your Attention

International Rubber Study Group