1 Mar 2023
Consumption fell in 2022, due to prolonged supply bottlebecks and microchip shortages
Singapore – The outlook for global rubber demand is closely tied to two current drivers of the global economy: the ending of the zero-Covid policy in China and Russia’s continuing war against Ukraine.
That’s according to the International Rubber Study Group in a release about the publication of its World Rubber Industry Outlook (WRIO), which provides long-term forecasts for the automotive, tire and rubber industry sectors.
While the rapid spread of Covid-19 in China dampened growth in 2022, the recent reopening “has paved the way for a faster-than-expected recovery,” Singapore-based IRSG noted in the 20 Feb release.
On the other hand, it said, a possible worsening of the ongoing conflict in Ukraine and tightening global fiscal stance could worsen debt distress and further weigh on the outlook.
“The balance of risks remains tilted to the downside, but the adverse risks have been moderated as we entered 2023,” the rubber industry body commented.
IRSG, therefore, forecast combined demand for natural rubber (NR) and synthetic rubber (SR) to rebound by 2.6% in 2023, reaching an estimated 30.64 million tonnes.
Within the inductry group's forecast, NR demand is projected to strengthen by 2.1% this year.
Following robust recovery in 2021, global rubber demand weakened as the global automotive sector was impacted by the prolonged supply bottlenecks and semiconductor shortages.
This “gloomy development” continued, in turn, to exert downward pressures on OE production and sales, which had an adverse impact on world rubber consumption, said IRSG.
Combined demand for NR and SR, it continued, “declined marginally” in 2022, mainly due to a contraction in tire sector demand.
Nevertheless, IRSG estimated that global NR demand increased by 1.7% in 2022, reaching 14.31 million tonnes.
IRSG linked the weaker growth to a slowdown in medium- and heavy-vehicle tire sales in China and replacement tire demand in mature markets.
On the production side, NR supply expanded by 5.8% in 2022 to reach 14.57 million tonnes.
Expansion in global output in 2022 was supported especially by production in Côte d'Ivoire and Thailand, and an increased suppliy from mature rubber areas in Cambodia, Myanmar and Laos.
Production is forecast to further expand by 1.1% in 2023, according to IRSG.
Slowing production in traditional producing countries in south-east Asia in the near-term is expected to be offset by an acceleration in production growth in Côte d'Ivoire and the Mekong region.
In the longer term, however, IRSG concluded that global production was likely to grow at a slower rate than NR consumption.
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