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Prepared by the Secretariat of the International Rubber Study Group

Outlook for the rubber industry International Smallholder Rubber Conference Phnom Penh, Cambodia 24 June 2009 Panel 4 : Prospects. Prepared by the Secretariat of the International Rubber Study Group. Presentation content. The world economy, the IMF scenario The vehicle sector The tyre sector

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Prepared by the Secretariat of the International Rubber Study Group

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  1. Outlook for the rubber industryInternational Smallholder Rubber ConferencePhnom Penh, Cambodia24 June 2009Panel 4 : Prospects Prepared by the Secretariat of the International Rubber Study Group

  2. Presentation content The world economy, the IMF scenario The vehicle sector The tyre sector Long-term aggregate rubber demand forecasts Natural rubber supply potential Natural and synthetic rubber demand The effect of alternative economic growth scenarios

  3. Economic developments Economic activity is represented by Gross Domestic Product (GDP) IRSG uses data from IMF IRSG forecasts for 2009 to 2014 are taken from the IMF IMF published data/forecasts in April 2009 Forecasts for later years are based on IRSG model

  4. World GDP growth, July 2008 and April 2009: recession hits earlier

  5. The vehicle sector

  6. Passenger car production

  7. Commercial vehicle production

  8. Growth in vehicle production

  9. The tyre sector

  10. Tyre sector • Tyre sales is the sum of • original equipment (OE) tyre sales, determined by the number of vehicles produced • replacement (RP) tyre sales, determined by • the number of vehicles on the road

  11. Passenger car tyre sales,original equipment

  12. Passenger car tyre sales,replacement

  13. Passenger car tyre sales,total

  14. Commercial vehicle tyre sales,original equipment

  15. Commercial vehicle tyre sales,replacement

  16. Commercial vehicle tyre sales,total

  17. Growth in tyre production

  18. Long-term aggregate rubber demand forecasts

  19. Aggregate rubber demand • Aggregate rubber demand in the tyre sector; influencing factors are tyre production and rubber weight per tyre • Aggregate rubber demand in the general rubber goods sector; influencing factor is economic development

  20. Rubber consumption 2018: tyres 16.5, GRG 11.2, total 27.7

  21. World rubber consumption(‘000 tonnes)

  22. Modelling natural rubber supply potential

  23. Natural rubber supply potential • About 85% of natural rubber is produced by smallholders • Production capacity suitable concept for synthetic rubber, but not for natural rubber

  24. A general framework for natural rubber supply • The trend in production will be called normal production • Production exceeds normal production at high prices • And vice versa

  25. The vintage approach derives and includes The composition of the total area for natural rubber according to the year of planting (the vintages) The average yield profile for a hectare of rubber during its life Technical progress in quality of clones affecting yield profiles of hectares planted in various years 18 April 2009

  26. Projections up to 2018 depend on planting policies

  27. Natural rubber productionThailand

  28. Natural rubber productionIndonesia

  29. Natural rubber productionMalaysia

  30. Natural rubber productionIndia

  31. Natural rubber productionVietnam

  32. Natural rubber productionChina

  33. Natural rubber productionSri Lanka

  34. Natural rubber productionCambodia

  35. Global NR normal production to reach 13.0 million t. by 2018; actual production higher or lower depending on prices

  36. Confronting supply potential and demand at 2008 market shares

  37. The market • Forecasts for consumption of rubber (already presented) • Production potential of natural rubber (already presented) • How do these compare?

  38. In broad terms: Technology: shares may depend on the country or the factory Composition of the end-uses: cv tyres use more NR than pc tyres Price ratio of NR over SR What are the determining factors driving the share of NR in total rubber consumption

  39. Rubber prices and oil

  40. Explaining developments in NR pricesAnalysis based on market equilibrium: supply and demand

  41. Explaining developments in SR prices

  42. Modelling prices of SBR using prices of styrene, butadiene and NR and GDP:a good fit

  43. Projections of prices of oil are given below.

  44. The price of oil to level off at around US$80/barrel and then decline

  45. The IRSG makes and needs price forecasts for NR and SR in interaction with production and consumption forecasts. The IRSG is not allowed to publish these forecasts.

  46. NR share in consumption

  47. Rubber consumption 2018: NR 12.8, SR 14.9, total 27.7

  48. World natural rubber consumption(‘000 tonnes)

  49. Consequences of alternative GDP scenarios Base: GDP scenario as described above Optimistic scenario: higher growth than in the base scenario Pessimistic scenario: lower growth than in the base scenario

  50. Growth in world GDP,alternative scenarios

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