(Bloomberg) -- Thailand-based Sri Trang Agro-Industry Pcl, the world's top rubber producer, expects no surplus of the commodity this year as demand recovers, and supply is hit by a shortage of tappers and fungal disease.
“Since this is the year of recovery for tires and autos, demand will rise while supply stays stable, so prices should be on an uptrend,” as long as there are no more disruptions to the global economy, Veerasith Sinchareonkul, executive director, said in an interview. “In the past, supply grew at a faster pace than demand, but this year supply grows much more slowly.”
Rubber demand will expand 5%-7% in 2021, while supply growth will be flat to 2%, Veerasith said. Rising demand for car tires as a result of a recovery in auto sales and travel is the key driver for prices as 80% of supply is used for tire manufacturing. Demand for rubber gloves is expected to continue to expand after the pandemic as emerging economies widen people's access to health care and the population ages, he said.
More comments from the interview:
- A shortage of tappers caused by the pandemic, and fungal disease that attacked trees in producing countries like Indonesia, will continue to cut output this year.
- Concerns about a rubber shortage in Europe and the U.S. largely stem from logistics issues with shipping and a container shortage.
- There're no signs of rubber shortages in China, the world's largest consumer, but any indications that there may be will have a significant impact on prices.
- Read More: Rubber Scarcity Creates New Headache for Beleaguered Automakers
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