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Asia continues to dominate the world supply of natural rubber, averaging 90% of total production; however, there has been a significant shift among the major producing countries. Malaysia, which accounted for 32% of world production in 1988, shifted emphasis to other crops and nonagricultural investments and produced only 8% of the world total by 1998. In recent years, however, Malaysia has stepped up its production by about 52%, and accounted for 14% of total world production in 2004. Thailand and Indonesia also increased their production by about 22% and 24%, respectively. Indian and Vietnamese production grew significantly, with increases of about 17% and 25%, respectively.
Thailand has been the world’s largest producer of natural rubber since 1993, accounting for 34% of world production in 2004, with Indonesia accounting for 24%.
Natural rubber is a naturally occurring elastomeric polymer of isoprene (2-methyl-1,3-butadiene) with excellent resistance to abrasion, impact, tear and heat buildup due to hysteresis. It is also characterized by very good tensile strength, green strength, resilience, flexibility, aging stability and building tack. However, it is not very resistant to oxidation, ozone, weathering, and a wide range of chemicals and solvents. Until World War II, essentially all rubber consumed was natural rubber. Both the United States and Western Europe were cut off from the main sources of natural rubber in Asia and Oceania by the war, resulting in the large-scale development of synthetic rubber.
The global shift to radial tires, which use a higher percentage of natural rubber than bias-ply tires, has resulted in a significant increase in natural rubber consumption over the past eighteen years. Increased rubber consumption in the natural rubber–producing countries has also been a factor. Natural rubber accounted for about 41% of worldwide rubber consumption in 2004, up from about 39% in 1993.
The following pie chart shows world consumption of natural rubber in 2004:
Growth in the consumption of natural rubber will be highly uneven among the major regions. China, with its fast-growing automotive and tire industries, is expected to increase its consumption by 12% per year during 2004–2009. Consumption in India and Central/South America is projected to grow at an average annual rate of 6%, higher than the world average. Consumption in the United States and Western Europe, on the other hand, is expected to be flat as a result of limited growth in the automotive industry and growing imports of tires.
Natural rubber is an agricultural product and as such, the price is strongly influenced by supply and demand. Prices peaked in early 1995 and, with minor fluctuations, have declined steadily to current levels, the lowest in over twenty years. With the projected high growth rate for natural rubber consumption in 2004–2009, the question arises whether production can keep up with growing demand. Major Southeast Asian producing countries increased production significantly and kept supply/demand generally balanced in 2001–2004. However, newly planted natural rubber trees take about five to seven years before they can be tapped and only reach their peak production in ten to twenty years. There is an inherent time lag between demand and supply. Also, like any other agricultural product, they are at the mercy of weather conditions, particularly the amount of rainfall. Periodic imbalance of supply and demand could arise and induce speculative activities.
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