the condition and outlook of world natural rubber supply and … · 2019-05-29 · the condition...

The Condition and Outlook of World Natural Rubber Supply and Demand

Mr Salvatore PinizzottoInternational Rubber Study Group (IRSG)

16th Shanghai Derivatives Market Forum 29th May 2019

Shanghai – P.R. China

About International Rubber Study Group (IRSG)

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Who are we? Established in 1944 as an inter-governmental

organisation, headquartered in London, UK As of July 2008, the Group has been based in

Singapore. IRSG is the forum for discussion of matters

affecting the supply and demand for natural as well as synthetic rubber.

Authoritative source of statistical data and analysis for all aspects of the rubber industry.

IRSG has 36 member countries.

IRSG has a network of more than 100 Industry Members

IRSG is the Global Platform for the Rubber Sector

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Consumers

Producers

Governments

Associations/Organisations

IRSG

Processors

Traders / Financial Institutions

R & D/ Universities

Agenda

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▹ Current Growth Scenario

▹ Facts and Fundamentals

▹ Future Growth and Strategies ▹

Global economic growth at 3.3% . Growth momentum is slowing and risk rising.

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World

ChinaUSA

Euro Area

India

Source: IMF

Source: World Economic Forum

35.2%

17.9%

8.6% 7.9%

2.5% 2.0% 1.8% 1.7% 1.6% 1.2%

China and the United States account for over half of global growth

Purchasing Managers’ Indices indicate softening demand and exports from Asia

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40.0

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46.0

48.0

50.0

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56.0

58.0

Apr-18 Jul-18 Oct-18 Jan-19 Apr-19

China EU US

演示者

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After a year and half of synchronized global growth, the paths forward have diverged for different countries. The deceleration is more noticeable in global trade activities, with softening demand from advanced economies and weaker exports from Asia. While demand appears to be decelerating, labour markets and inflation are on the rise in many countries.

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-2000

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$/To

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NR-SR Spread NR-SGX TSR20 SBR-Asia BD-Asia

Rubber Price Relationship

演示者

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July-Aug prices avg $1.34/kg is 12% below compared with Dec 17 lever. BD and synthetic rubber prices strengthened supported by crude oil prices. SBR prices has been consistently higher than NR prices for more than 2 years Crude prices are pushed up over market sentiments on imposition US sanction over Iranian sales and decision against increasing output by Opec and Russia

World Supply of Rubber 9

Natural Rubber: 48% Synthetic Rubber: 52%

Source: SR capacity IISRP, 2018

Asia Ex China29%

China27%

North America

16%

EMEA16%

Russia8%

LA4%

Asia Ex China China North America EMEA Russia LA

Natural Rubber - Supply Chain Facts

▹ Above 12 million ha area (estimated)

▹ Production is predominantly from South-East Asia

▹ Around 90% of holding units and 85%production are from smallholdings

▹ Average size of holdings varies from 0.5 ha- 10 ha (depending on country definition)

▹ Wide variation in smallholders’ productivity across countries

▹ Presence of multiple intermediariesbetween producers and processors

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0 1000 2000 3000 4000 5000

Taiwan, China

Italy

Saudi Arabia

India

Germany

France

Brazil

Singapore

Japan

Russia

South Korea

USA

China

Thailand & Indonesia representing 61% of Global NR Production. China and USA representing 42% of Global SR Capacity

Source: SR capacity IISRP, 2018

演示者

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Thailand accounted for 36% global production, Indonesia 26%, Vietnam 8%, China 6%, India and Malaysia 5% each. Production of 2017 is 13,929 KMT, 2.7% higher than 2017. Côte d'Ivoire, Cambodia and Myanmar are growing at double digit.

World Rubber Production (IRSG)

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World Rubber Consumption (IRSG)

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Global NR Rubber Consumption (IRSG)14

By Country

China 40%

EU-289%

India 8%

USA7%

Japan5%

Indonesia5%

Thailand 5%

Malaysia4%

Brazil3%

S.Korea3%

ROW11%

Tyre 71.4%

GRG28.6%

By Type

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More than 1/3rd of NR Usage in China(KT)

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2000 2018

演示者

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Last two decades of rapid growth in automotive industry in China (NR usage from 16% to 40% ) new domestic tyre capacities were installed, by both domestic and global tyre majors. US and EU are two major partners of China for tyre exports. Anti-dumping and countervailing duties were initially imposed by US (for PC from 2014; TBT on case by case ) and EU imposed countervailing for TBR in 2018. Several Chinese tyre makers have invested and shifted part of their production facilities to Thailand in order to avoid countervailing duties-significant increase in tyre trade from Thailand as low cost origin, contributed to significant increase in rubber usage in Thailand. Slowing rubber consumption growth in China was offset by ASEAN consumption growth (especially Thailand, Indonesia and Vietnam ) and strong growth in China.

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China is the major driver for global NR Consumption and Trade

演示者

演示文稿备注

Thailand accounted for 36% global production, Indonesia 26%, Vietnam 8%, China 6%, India and Malaysia 5% each. Production of 2017 is 13,559 KMT, 8% higher than 2016. Côte d'Ivoire, Cambodia and Myanmar are growing at double digit.

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More than five fold increase in mixture rubber import from 2015 level with significant decline in TSR (-19%) and RSS (-7%)

0

1000000

2000000

3000000

4000000

5000000

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2010 2011 2012 2013 2014 2015 2016 2017 2018

Tonn

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China - NR Import Including Mixture Rubber

400110 400121 400122 400129 400280

演示者

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With imposition of ceiling on NR content in compound rubber (4005) 88% for NR content , more NR was shipped under mixture rubber HS code (400280) with around 2.5% or even less than that of SR as filler( with zero import tariff).

18 25% increase total rubber area in the last 10 years mainly driven by Mekong Region

0

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1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

Mature and Immature area

IM Mature

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Growth Trend

IM Mature

NR area expansion more than three million ha in the last decade

演示者

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1.4% growth total area and 2.1% increase in mature over the last 7 years with rapid increase 2005-08 and 2011-13 period.

China Vehicle Sector Slowing Down

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2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027

PC CV PC% CV%

thousands

演示者

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Graph is China vehicle sales 2018 China PC sales 25.3 million, down by 0.3%, CV sales 4.8 million, up by 2.1% India’s GDP growth accelerated 7.2% in Q3 supported by strong manufacturing growth

IRSG Forecast Global Natural Rubber Consumption20

China2017: +6.4%2018: +3.8%2019: +1.6% 2020: +1.6%

World2017: +4.3%2018: +4.9%2019: +2.6% 2020 +2.3%

USA2017: +2.8%2018: +6.9%2019: +2.6% 2020 +0.2%

Europe2017: +4.3%2018: -0.4%2019: +2.3% 2020 +2.3%

India2017: +4.7%2018: +12.1%2019: +8.1% 2020: +4.6%

演示者

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Sluggish pc market &weak OEM; Weak replacement demand; transport policy shift from highway transport Global NR: 2017 (4.3%), 2018 (4.9%)’ 2019 (2.6%) &2020 (2.3%) China NR Growth: 2017 (6.4%), 2018 (3.8%)’ 2019 & 2020 (1.6%)

NR Production, Usage and SD Balance (thousand tonnes)

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

SD Bal (RH scale) Production Consumption

演示者

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Coming to the S-D balance. We are expecting modest level of surplus in next three years-given . The surplus in 2019 is estimated to be at 31,000 tons, following by 24,000 tons in 2020 and 36,000 in 2021. All of these data and forecast is based on IRSG WRIO (DEC 2018 )report. As Global economic growth is revised downward by IMF in April 2019, and global trade uncertainty persists, market looks balanced given adverse impact of weather on supply remains nominal and small farmers continue to be tapping under current market prices. However. There is an estimated 3.6 million tonnes by 2018. Deviation from ANRPC driven by Thailand production figures.

Supply Chain Challenges

22 Customer requirements are changing with technology and mobility changes

Downstream industry focus is to provide solutions than product

Advanced technology to support fuel efficiency, supply chain mapping andprecision farming

Addressing sustainable production andconsumption

Mobility ecosystem responses and sustainable mobility

Alternative raw materials fit in the sustainability agenda

Addressing end of product management &Waste management

演示者

演示文稿备注

Advanced technologies designed to help vehicles to achieve: •Improved fuel efficiency thereby reduction in co2 emission End user applications, especially tyre segment •Concept tyres….. •100% sustainable materials •intelligent tyres New technology like ologic –low rolling resistance and higher wet grip performance •forward thinking tyres…aero concept to flying car •Product to solution providers EVs equipped with 5G technology

NR: Main Concerns and Opportunities

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Robust Increase in rubber area raises concerns on deforestation

Continuing low prices; Impact on smallholders.

Inefficiency in the supply chain & lack of industry-wide reference on cost of production.

Need to find ways to add value to NR.

Extensive use of innovative solutions in rubber plantations.

演示者

演示文稿备注

Synthetic sources takes 54% of total usage and remaining 46% by natural elastomer; 2.6% expected growth in rubber consumption in the next decade; 2.4% in tyre sector and 2.8% growth in non-tyre sector- with 2.4% growth for NR and 2.7% growth for SR. No one knows with certainty, but mobility will undergo dramatic shift in future and tyres will play a vital part in the transformation process.

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WRS 2019 - From Evolution to Revolution New Paths for the Rubber Economy (March 2019)

Key Takeaways

Rubber consumption is growing modestly while NR production intensity is declining despite increase in new tapping area

Demand continues to be driven by emerging market growth and recovery in mature markets

Slowing tyre sales and rubber consumption growth in China. Deceleration has not impacted so far the global growth in medium-term

Mobility and Digitization will drive innovation and disruption in the rubber industry

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演示者

演示文稿备注

We have confirmed an increase in new tapping area in Thailand which is expected to lead a stable NR production growth in the next few years to come. On the demand side, we are expecting solid growth in emerging economies such as Russia, Brazil and some of the SEA countries. Growth will also be backed by better than expected recovery in mature markets especially in the Europe. Last but not least, China, the engine for growth in the past decade, is expected to have a slowing down in both tyre and rubber consumption, due to the cooling down of infrastructure building and property market development, more strict environmental regulations on local tyre industry and also the slowing down in passenger car sales due to traffic congestions and severe air pollution in urban cities.

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Thank you for your kind attention !

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the condition and outlook of world natural rubber supply and … · 2019-05-29 · the condition...

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