Global prices of natural rubber may go up due to an increase in demand and an anticipated fall in supply. It is expected that the world’s largest consumer of natural rubber, India, will see an increase in demand to the extent of 4.7% in 2012-13 and a rise of 3.1% y-o-y in first quarter of 2012. This will be due to an increased demand from the Indian auto industry, which is the main consumer of rubber. Also an increase in demand is expected from US and Japan.
On the other hand, production is likely to fall domestically, in India as well as in the major rubber producing nations, globally. India's Rubber Board data shows production in the country has dipped 0.7% for the month March due to the prevailing hot and dry climate in the major growing regions.
Further according to the Association of Natural Rubber Producing Countries (ANRPC), due to heavy rainfall in major rubber growing areas of Malaysia and China, the global natural rubber production is marginally lowered to 10.420 million tonnes in 2012 from the earlier estimates. Earlier, the ANRPC has pegged the production to be around 10.529 million tonnes in 2012.
Given the demand and supply scenario, a rise in the prices of natural rubber is expected. On a positive note, the increase in demand also signals to an increase in business activity in these nations.
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