Oil prices drive demand for natural rubber

LOCAL rubber producers could reap a windfall from higher international prices, the Myanmar Rubber Planters and Producers Association says.

U Khaing Myint, the association’s secretary general, said international prices have nearly doubled since the end of December, rising from US$3000 a tonnes to $5600 on March 29.

Recent increases in the crude oil price, which has nearly hit $107 a barrel – the highest price since September 2008 – have driven international rubber prices upward, although the March 11 earthquake and tsunami in Japan had briefly pushed prices as low as $2000 a tonne.

“Rubber prices have been rising strangely this year. With crude oil prices rising quickly I think synthetic rubber is less attractive commercially, which should increased demand for natural rubber,” he added.

A Ministry of Commerce official said: “The demand for naturally produced rubber always strengthens when the crude oil price rises because it becomes more economical.”

He said the number of trees planted and the amount of rubber harvested are gradually expanding. In the 2010-11 fiscal year, which ended March 31, about 1.2 million acres of rubber trees had been planted, with about 120,000 tonnes of latex extracted from about 400,000 acres. Nearly 100,000 tonnes of rubber, earning $132 million, had been exported by early March, U Khaing Myint said.

By comparison, less than 100,000 tonnes of rubber was extracted in the previous financial year.

U Khaing Myint said about 90 percent of all the rubber produced locally is exported, with about 70pc sold to China and the rest shipped to Malaysia, Indonesia, Singapore, Vietnam, South Korea and India.

There are rubber plantations in Kachin, Kayin, Chin, Mon, Rakhine and Shan states and Tanintharyi, Bago and Ayeyarwady regions, with Mon State and Tanintharyi Region the major producers.

U Khaing Myint said the majority of rubber producers are small enterprises and cannot produce high-quality stock, so they earn lower prices.

U Khaing Myint said a recently released study produced by the International Rubber Study Group predicts that by 2013 the world’s rubber consumption is expected to rise to 19.5 million tonnes of naturally produced rubber.

(Source: http://www.mmtimes.com/2011/business/569/biz56903.html)