China rubber demand to slow as auto sales fall

Natural rubber demand in China will slow in 2012, which is the world’s largest consumer, due to lower projected car sales, Bloomberg reported. Rubber prices have fallen 33% this year, the largest drop since 2008, amid high supply from producers like Thailand and economic troubles in the US and Europe. China’s share of global demand for rubber was 34% in 2010, according to the International Rubber Study Group. “Growth in China’s demand for natural rubber next year is poised to slow down amid sluggish new auto sales,” said Li Shiqiang, general manager at rubber exporter Sri Trang. Vehicle sales grew 32% in 2010, year-on-year, but this is forecast to fall as the economy is predicted to grow at only 8.5% in 2012, the least in 11 years. Low sales have put pressure on the tire industry to lower prices and look to consolidation. “Next year it’s likely that supply will outstrip demand because of a slowdown in the global economy and the subsequent weak demand from the auto and tire sectors,” said He Yihua, a trading manager at Okachi.