Regional Demand Analysis & Outlooks:Regional Demand Analysis & Outlooks:China, India & ASEAN Consumption & Usage ForecastsChina, India & ASEAN Consumption & Usage Forecasts

Presented at Presented at

Thai Rubber Conference 2007Thai Rubber Conference 2007

byby

Yium TavarolitYium Tavarolit

Chief Secretary and EconomistChief Secretary and Economist

International Rubber Consortium Limited (IRCo)International Rubber Consortium Limited (IRCo)

VenueVenue

Royal Orchid Sheraton Hotel, BangkokRoyal Orchid Sheraton Hotel, Bangkok

5 July 2007 5 July 2007

2

Table 1. Global rubber production and annual % change by year (1995–2006)

I. Asia-Pacific Rubber Consumption AnalysisI. Asia-Pacific Rubber Consumption Analysis

YearYear NR NR (‘000 tons)

%% SR SR (‘000 tons)

%% TotalTotal(‘000 tons)

%%

1995 6,040 - 9,430 - 15,470 -

1996 6,440 6.62% 9,760 3.50% 16,200 4.72%

1997 6,460 0.31% 10,080 3.28% 16,540 2.10%

1998 6,840 5.88% 9,880 -1.98% 16,720 1.09%

1999 6,810 -0.44% 10,390 5.16% 17,200 2.87%

2000 6,762 -0.70% 10,818 4.12% 17,580 2.21%

2001 7,238 7.04% 10,483 -3.10% 17,721 0.80%

2002 7,302 0.88% 10,882 3.81% 18,184 2.61%

2003 7,975 9.22% 11,390 4.67% 19,365 6.49%

2004 8,654 8.51% 11,989 5.26% 20,643 6.60%

2005 8,777 1.42% 12,078 0.74% 20,855 1.03%

2006 9,188 4.68% 12,515 3.62% 21,703 4.07%

Average 3.95% 2.64% 3.14%Source: IRSG

3

4

6

8

10

12

14

16

18

20

22

24

95 96 97 98 99 00 01 02 03 04 05 06

(Mil

lio

n T

on

s)

NR

SR

Total

3.14%

2.64%

3.95%

Figure 1. Global rubber production by year (1995–2006)

Source: IRSG

4

YearYearNR NR

(‘000 tons)%%

SR SR (‘000 tons)

%%TotalTotal

(‘000 tons)%%

1995 6,000 - 8,220 - 14,220 -

1996 6,110 1.83% 9,590 16.67% 15,700 10.41%

1997 6,470 5.89% 10,010 4.38% 16,480 4.97%

1998 6,540 1.08% 9,870 -1.40% 16,410 -0.42%

1999 6,660 1.83% 10,290 4.26% 16,950 3.29%

2000 7,381 10.83% 10,764 4.61% 18,145 7.05%

2001 7,333 -0.65% 10,253 -4.75% 17,586 -3.08%

2002 7,628 4.02% 10,724 4.59% 18,352 4.36%

2003 8,033 5.31% 11,404 6.34% 19,437 5.91%

2004 8,581 6.82% 11,894 4.30% 20,475 5.34%

2005 8,994 4.81% 12,010 0.98% 21,004 2.58%

2006 8,956 -0.42% 12,617 5.05% 21,573 2.71%

Average   3.76%   4.09%   3.92%

Table 2. Global rubber consumption and annual % change by year (1995–2006)

Source: IRSG

5

4

6

8

10

12

14

16

18

20

22

24

95 96 97 98 99 00 01 02 03 04 05 06

(Mill

ion

Ton

s) NR

SR

Total

3.92%

4.09%

3.76%

Figure 2. Global rubber consumption by year (1995–2006)

Source: IRSG

6

YearYearNR NR

(‘000 tons)%%

SR SR (‘000 tons)

%%TotalTotal

(‘000 tons)%%

1995 1,620 - 2,410 - 4,030 -

1996 2,100 29.63% 2,350 -2.49% 4,450 10.42%

1997 2,090 -0.48% 2,420 2.98% 4,510 1.35%

1998 2,390 14.35% 2,430 0.41% 4,820 6.87%

1999 2,540 6.28% 2,530 4.12% 5,070 5.19%

2000 1,950 -23.23% 2,590 2.37% 4,540 -10.45%

2001 1,972 1.13% 2,960 14.29% 4,932 8.63%

2002 1,705 -13.54% 3,150 6.42% 4,855 -1.56%

2003 1,735 1.76% 3,169 0.60% 4,904 1.01%

2004 1,768 1.90% 3,349 5.68% 5,117 4.34%

2005 1,568 -11.31% 3,599 7.46% 5,167 0.98%

2006 1,760 12.24% 3,759 4.45% 5,519 6.81%

Average   1.70%   4.21%   3.05%

Table 3. NR, SR, Total rubber stocks and annual % change by year (1995–2006)

Source: IRSG

7

0

1

2

3

4

5

6

95 96 97 98 99 00 01 02 03 04 05 06

(Mill

ion

Ton

s) NRSRTotal

3.05%

4.21%

1.70%

Figure 3. NR, SR, Total rubber stocks by year (1995–2006)

Source: IRSG

8

YearYearNR NR

(‘000 tons)%%

SR SR (‘000 tons)

%%TotalTotal

(‘000 tons)%%

1995 780 - 760 - 1,540 -

1996 810 3.85% 870 14.47% 1,680 9.09%

1997 910 12.35% 995 14.37% 1,905 13.39%

1998 839 -7.80% 1,000 0.50% 1,839 -3.46%

1999 852 1.55% 1,285 28.50% 2,137 16.20%

2000 1,150 34.98% 1,455 13.23% 2,605 21.90%

2001 1,330 15.65% 1,575 8.25% 2,905 11.52%

2002 1,395 4.89% 1,750 11.11% 3,145 8.26%

2003 1,525 9.32% 1,255 -28.29% 2,780 -11.61%

2004 1,865 22.30% 2,438 94.22% 4,303 54.77%

2005 2,045 9.65% 2,580 5.85% 4,625 7.50%

2006 2,170 6.11% 3,145 21.90% 5,315 14.92%

Average   10.26%   16.74%   12.95%

Table 4. China rubber consumption and annual % change by year (1995–2006)

Source: IRSG

9

0

1

2

3

4

5

6

95 96 97 98 99 00 01 02 03 04 05 06

(Mill

ion

Ton

s) NR

SR

Total12.95%

16.74%

10.26%

Figure 4. China rubber consumption by year (1995–2006)

Source: IRSG

10

YearYearNR NR

(‘000 tons)%%

SR SR (‘000 tons)

%%TotalTotal

(‘000 tons)%%

1995 517 - 133 - 649 -

1996 558 8.07% 142 6.55% 700 7.76%

1997 572 2.42% 158 11.65% 730 4.29%

1998 580 1.50% 155 -2.09% 735 0.73%

1999 619 6.69% 164 6.14% 783 6.57%

2000 638 3.00% 171 4.26% 809 3.27%

2001 631 -1.11% 172 0.23% 802 -0.83%

2002 680 7.83% 192 11.65% 872 8.65%

2003 717 5.46% 203 5.95% 920 5.56%

2004 745 3.93% 223 9.65% 968 5.19%

2005 789 5.89% 233 4.80% 1,023 5.64%

2006 816 3.45% 263 12.68% 1,079 5.55%

Average   4.28%   6.50%   4.76%

Table 5. India rubber consumption and annual % change by year (1995–2006)

Source: IRSG

11

0.00

0.20

0.40

0.60

0.80

1.00

1.20

95 96 97 98 99 00 01 02 03 04 05 06

(Mill

ion

Ton

s) NR

SR

Total

4.76%

4.28%

6.50%

Figure 5. India rubber consumption by year (1995–2006)

Source: IRSG

12

YearYearNR NR

(‘000 tons)%%

SR SR (‘000 tons)

%%TotalTotal

(‘000 tons)%%

1995 692 - 1,085 - 1,777 -

1996 715 3.25% 1,125 3.64% 1,839 3.49%

1997 713 -0.21% 1,163 3.42% 1,876 2.01%

1998 707 -0.80% 1,122 -3.53% 1,829 -2.49%

1999 734 3.80% 1,133 0.97% 1,867 2.07%

2000 752 2.40% 1,138 0.41% 1,889 1.19%

2001 729 -3.01% 1,085 -4.61% 1,814 -3.97%

2002 749 2.72% 1,096 1.00% 1,845 1.69%

2003 784 4.70% 1,111 1.34% 1,895 2.70%

2004 815 3.90% 1,146 3.21% 1,961 3.49%

2005 857 5.23% 1,156 0.85% 2,013 2.67%

2006 865 0.92% 1,169 1.10% 2,034 1.02%

Average   2.08%   0.71%   1.26%

Table 6. Japan rubber consumption and annual % change by year (1995–2006)

Source: IRSG

13

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2.20

95 96 97 98 99 00 01 02 03 04 05 06

(Mill

ion

Ton

s) NR

SR

Total

1.26%

0.71%

2.08%

Figure 6. Japan rubber consumption by year (1995–2006)

Source: IRSG

14

YearYearNR NR

(‘000 tons)%%

SR SR (‘000 tons)

%%TotalTotal

(‘000 tons)%%

1995 874 - 503 - 1,377 -

1996 893 2.19% 458 -9.03% 1,350 -1.91%

1997 873 -2.24% 459 0.35% 1,332 -1.36%

1998 838 -3.96% 448 -2.46% 1,286 -3.45%

1999 917 9.40% 493 10.14% 1,410 9.66%

2000 1,007 9.80% 574 16.34% 1,581 12.09%

2001 1,073 6.60% 538 -6.24% 1,611 1.94%

2002 1,114 3.82% 580 7.84% 1,695 5.16%

2003 1,108 -0.59% 587 1.15% 1,695 0.01%

2004 1,233 11.28% 640 9.01% 1,872 10.49%

2005 1,261 2.34% 688 7.53% 1,950 4.12%

2006 1,285 1.85% 765 11.18% 2,050 5.14%

Average   3.68%   4.17%   3.81%

Table 7. Asian rubber consumption and annual % change by year (1995–2006)

Source: IRSG

15

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2.20

95 96 97 98 99 00 01 02 03 04 05 06

(Mill

ion

Ton

s) NR

SR

Total

3.81%

3.68%

4.17%

Figure 7. Asian rubber consumption by year (1995–2006)

Source: IRSG

16

Figure 8. Trends in demand for tires (2005–2020)

Source: IRSG, IRCo

05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

U.S.A. EU. Asia

Asia

EU.

U.S.A.

17

II. Demand Projection and Forecast (from 2007 to 2035)II. Demand Projection and Forecast (from 2007 to 2035)

Source: LMC

Table 9. Consumption of NR & SR(1995–2006) and forecast (2010-2035)

YearRubber (Million Tons)

YearRubber (Million Tons)

NR SR Total % NR SR Total %

1995 6.00 8.22 14.22 - 2004 8.58 11.89 20.48 5.35%

1996 6.11 9.59 15.70 10.41% 2005 8.99 12.01 21.00 2.54%

1997 6.47 10.01 16.48 4.97% 2006 8.96 12.62 21.57 2.71%

1998 6.54 9.87 16.41 -0.42% 2010 9.53 14.13 23.66 9.69%

1999 6.66 10.29 16.95 3.29% 2015 10.60 15.58 26.18 10.65%

2000 7.38 10.76 18.15 7.08% 2020 11.68 16.99 28.67 9.51%

2001 7.33 10.25 17.59 -3.09% 2025 12.78 18.45 31.23 8.93%

2002 7.63 10.72 18.35 4.32% 2030 13.89 19.86 33.75 8.07%

2003 8.03 11.40 19.44 5.94% 2035 15.03 21.26 36.29 7.53%

18

0

5

10

15

20

25

30

35

40

95 96 97 98 99 00 01 02 03 04 05 06 10 15 20 25 30 35

(Mill

ion

Ton

s)

NR SR Total

3.92%

9.06%

Source: LMC

Figure 9. Consumption of NR & SR(1995–2006) and Forecast (2010-2035)

19

YearYear

TOCOMTOCOM

%%

PhysicalPhysical

%%

CorrelCorrel.. CorrelCorrel..

RSS 3RSS 3 Average PriceAverage Price [[22] ] VS VS [[44]] [[33] ] VS VS [[55]]

((YenYen//kgkg)) ((US Cents/kgUS Cents/kg))      

[[11]] [[22]] [[33]] *[*[44]] [[55]] [[66]] [[77]]

1995 153.01 - 154.41 -    

1996 147.90 -3.34% 130.82 -15.28%    

1997 118.73 -19.72% 95.8 -26.77%    

1998 92.80 -21.84% 67.35 -29.70%    

1999 72.28 -22.11% 60.31 -10.45%    

2000 74.86 3.57% 64.62 7.15%    

2001 66.60 -11.03% 54.28 -16.00% 97.46%97.46% 75.09%75.09%

2002 99.17 48.90% 75.39 38.89%    

2003 128.75 29.83% 102.25 35.63%    

2004 140.59 9.20% 123.96 21.23% 1919   

2005 165.49 17.71% 141.95 14.51%    

2006 243.91 47.39% 198.55 39.87% 99.10% 88.12%

          97.73% 94.66%

Source: IRCo

Note: *[4] from average NR price of SIR20, SMR20, STR20 and RSS3

Table 10. RSS3 price on TOCOM and physical average price

III. Regional Rubber Prices Movements and ConcernsIII. Regional Rubber Prices Movements and Concerns

MovementMovement

20

20406080

100120140160180200220

95 96 97 98 99 00 01 02 03 04 05 06

US Cents/kg

20406080100120140160180200220240260

Yen/kg

Physical Price Average (US Cents/kg) TOCOM RSS 3 (Yen/kg)

-12.41%

30.61%

-15.18%

30.03%

Source: IRCo

Figure 10. RSS3 price on TOCOM and physical average price

21

19951995: Tight regional supply due to heavy rainfall and floods and high overseas demand

19961996: Increased supply and surplus in China, high unemployment in Europe, and slack automobile market and troubled tire industry

19971997: Cheaper Indonesian natural rubber, 13,000 workers struck at Goodyear Tire and Asian economic crisis in the mid - year

19981998: Increased supply, economic slowdown in Asia, weak Ringgit, INRO Council agreed to dispose 55,000 tons per quarter

19991999: INRO liquidated its stocks, soft demand, aggressive offers of exporters

20002000: (Unusual phenomenon) oil price climbed to US$37.15, highest Nymex record in the last 10 years, heavy floods in the South of

Thailand and Peninsular Malaysia, output down by 30-50%

20012001: Continuous rain reduced supplies by 30-40%, INRO completely liquidated all its stocks, and signing of Bali Declaration

by Thailand, Indonesia and Malaysia to cut back production by 4% and exports by 10% beginning 2002

Source: IRCo

22

20022002: Tight supply, the news of delayed shipments, strengthening of Rupiah, Thai Baht, low rubber stocks at Japanese warehouses,

and establishment of International Rubber Consortium Limited( IRCo)

20032003: Tight supply due to rain, low Chinese and Japanese stocks, and unfavorable weather caused raw material shortage, strong

buying interest from China and tire-makers and futures markets

20042004: Shortage of supplies during wintering season, China announced that it would increase consumption by 130,000 tons,

active rubber futures markets, crude oil prices on Nymex surged over US$50 a barrel, strengthening Thai Baht and Rupiah, active buying activities from China and tire-makers, and Tsunami on 26

December caused worries over tight supplies

20052005: Tight supplies, strong demand from major tire-makers, low stocks in China and Japan, hike in oil prices to US$70.85 a barrel

on 29 August, floods in the South of Thailand and Malaysian Peninsular, and typhoon Damrey hit Hainan on 26 September

Source: IRCo

23

20062006: Global economy remained firm, supply and demand looked balanced but the rubber price shot up to the peak in early July due to high speculation and over-bought, especially on TOCOM. The rubber price fell to the floor in late November before rebounding

afterwards. We saw delayed shipments of exporters in the first half of the year and defaults in taking delivery of buyers in the second

half of the year

20072007: firm global economy, tight supplies during Jan – May, Floods in Northern Sumatra in Indonesia and Souhthern Malaysia, early

wintering in Southern Thailand was expected to reduce production by around 30 – 40 percent, strengthening of regional currencies and the China’s yuan, China has changed its strategy to buy from hand-

to-mouth, TOCOM is less aggressive than last year.

Source: IRCo

24

Movement (con’t)Movement (con’t)

The FallThe Fall: came from (1995 – 2001)

• Less bargaining power of NR producing countries despite firm global economy

• Asian economic crisis in mid-1997

The RiseThe Rise: has come from (2002 – the present)

• The global economy has rebounded to the present

• The China factor

• Establishment of Tripartite rubber cooperation among Thailand, Indonesia, Malaysia

Source: IRCo

25

ConcernsConcerns

• Economic imbalance between the U.S. and China will decelerate the global economic growth

• Possibility of China’s economic bubble if the government cannot administer the fiscal and financial policies efficiently and

effectively

• High oil prices will decelerate the global economic growth

• Strong influence on rubber futures by hedge funds will remain

• Imbalance of rubber supply and demand might be seen

• Geopolitical confrontation will be more severe and will be a bearish factor for the rubber industry

• Global climate change will affect the NR production pattern

Source: IRCo

26

How to get rid of these concernsHow to get rid of these concerns

Strategies:-Strategies:-

• Manage NR supply to meet its demand at a remunerative and sustainable price for both producers and consumers through

“The Tripartite Rubber Council: ITRC.”

Source: IRCo

• To manage NR marketing and to stabilize rubber prices by regional cooperation through “International Rubber

Consortium Limited: IRCo”

27

Thailand

MalaysiaIndonesia

Rubber Auction Market Networking

Buyers

Products: RSS3, STR20, SIR20, SMR20

Source: IRCo

• To strengthen physical rubber markets by establishing “rubber auction markets and their networks” among the ITRC

28

Strategies:- (con’t)Strategies:- (con’t)

• Encourage domestic rubber investment to create value-added rubber products

• ITRC’s governments have to invest in Human Resource Development (HRD) to increase rubber productivity, to lower

cost of production, and to improve rubber technologies

• MIS of IRCo

Source: IRCo

29

MIS of IRCoMIS of IRCoRubber Database storing on IRCo’s Website 2007

Supply Demand Prices Stocks OthersProduction

CostsEconomy Finance

- Text- Graphic- Multimedia- Statistics

Data Processing by Computer Softwares

Analytical Reports

2008

NR, SR, ForecastSMS, AETS, SMO

TireAutomobile

Relevant reports, articles, proceedings, etc

GovernmentsIRCoITRC

NTRCs Indonesia

Malaysia

ThailandBoDs

Shareholders

CSMO

Management Office

Vietnam

Indonesia

Malaysia

Thailand

Vietnam

Source: IRCo

30

IV. Regional Markets for Industrial Rubber ProductsIV. Regional Markets for Industrial Rubber Products

Table 11. Demand in Tire and non – Tire, 1995 – 2035

YearTire Non-Tire Total [2] / [6]

Volume % Volume % Volume % %

[1] [2] [3] [4] [5] [6] [7] [8]

1995 7.42 - 7.83 - 15.25 - 48.66%

2000 9.28 25.07% 8.71 11.24% 17.99 17.97% 51.58%

2005 11.16 20.26% 9.91 13.78% 21.07 17.12% 52.97%

2010 12.69 13.71% 10.97 10.70% 23.66 12.29% 53.63%

2015 14.27 12.45% 11.90 8.48% 26.17 10.61% 54.53%

2020 15.84 11.00% 12.84 7.90% 28.68 9.59% 55.23%

2025 17.43 10.04% 13.81 7.55% 31.24 8.93% 55.79%

2030 19.03 9.18% 14.72 6.59% 33.75 8.03% 56.39%

2035 20.65 8.52% 15.64 6.25% 36.29 7.53% 56.90%

*** In Million TonsSource: LMC & IRCo

31

Figure 11. Demand in Tire and non – Tire, 1995 – 2035

0

5

10

15

20

25

30

35

40

1995 2000 2005 2010 2015 2020 2025 2030 2035

(Mill

ion

Ton

s)

Tire Non-Tire Total

Source: LMC

32

ConclusionConclusion

• Asia-Pacific will be the biggest rubber consumers, especially China and India because of an increase of domestic demand in vehicles. Asia-Pacific will the major production bases of tires and non-tire

goods for the global market

• Demand of rubber in the region will grow by 9.06 % during 2010 – 2035 as compared to 3.92 % during 1995 – 2006 that means the world

needs additional 14.72 million tons of rubber in 2035

• Regional rubber prices in the future will depend on the global economic and population growth, energy prices and demand and

supply of natural rubber (NR), and the cooperation among rubber producing countries. For this reason, NR producing countries have to

manage its supply efficiently to prevent any surplus of NR in the rubber market

• Regional markets for industrial rubber products for both tire and non-tire sectors will rise at a regressive rate due to substitution of

other raw materials

33

Thank You Thank You

for Your Attentionfor Your Attention