HANNOVER, Germany — The price of natural rubber is expected to rise through mid-year before supply catches up with demand and eases pressure on prices, according to an expert in the field speaking at the recent Tire Technology Expo in Hannover.
Hidde Smit, a consultant and analyst with Rubberforecasts.com, said reduced rubber-tapping activity and heavy flooding in Thailand earlier this year have cut supply and led to the recent rise in pricing.
Mr. Smit, a former secretary-general of the International Rubber Study Group, said rising demand and a slowdown in tapping likely will push NR prices in the coming two quarters to around $2.45 per kilogram, vs. $2 or even lower the past few years.
"In Thailand, the wintering period starts in February and we had floods first. And I've been told by people in the industry that if you have floods first and then the wintering period, the period will be most severe and longer, taking longer to dry out and to recuperate," Mr. Smit explained.
He said he expects prices to start falling again in the second half, "…because the Thais will come back tapping and maybe some of the other countries think there's hope and they continue tapping. And then that's when you have this big surplus again weighing on the market."
NR prices will decline slightly for a few years, he added, and then recover, when the peak in surplus production is over.
"By around late 2020s, depending on the consumption and planting scenarios, NR prices will reach $3 per kilo," he said.
Shahrzad Pourriahi, is a reporter with European Rubber Journal, a London-based sister publication of Tire Business.