Rubber prices are touching multi-year highs on concerns about supply. A drought in south-east Asia as well as the insurgency in the important rubber growing areas of southern Thailand are causing shortages of natural rubber. Meanwhile, synthetic rubber is becoming more costly because of its oil feedstock.
Tyre makers now use a near equal combination of natural and synthetic rubber. Natural rubber originates from the Hevea tree and farmers collect the latex by shaving off a thin part of the bark.
According to the International Rubber Study Group, in its June forecast, total rubber consumption is expected to rise 3.7 percent this year to 20.68 million tonnes and by 4.1 percent to 21.51 million tonnes in 2006.
Because of higher oil prices, natural rubber consumption is expected to surge 5.2 percent to 8,681,000 tonnes this year and by 3.6 percent in 2006 to 8,993,000 tonnes.
Synthetic rubber consumption is expected to rise 2.6 percent to 12 million tonnes this year and grow 4.4 percent to 12.52 million tonnes in 2006.
Latin America is expected to lead growth in rubber consumption with a 6.3 percent rise this year, followed by Asia Pacific with 4.1 percent, Africa 4.1 percent and North America 3.6 percent. World natural rubber production, led by Thailand, is now expected to grow by only 3.6 percent to 8,934,000 tonnes this year and may increase by only 0.9 percent to 9,011,000 tonnes in 2006, according to the International Rubber Study Group.
Synthetic rubber output is expected to rise 1.0 percent in 2005 to 12.08 million tonnes and grow 2.9 percent to 12.43 million tonnes in 2006.
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