China factor

The Rubber Economist Ltd

The China factor

China is the fastest and the largest rubber consuming country in the world. The Rubber Economist Ltd can help you estimate rubber demand and supply in China, which may have impact to demand/supply of your own products.

The Chinese rubber industry has grown impressively over recent years and now holds great strategic importance within the overall economy and the world rubber industry. In fact, sharp economic growth has translated into heightened demand for various raw materials and, of course, provided a boost to the consumption and prices of many commodities. As a result, China is now the largest consumer of most primary commodities, and the term ‘China factor’ is an often used term in the international press. The China factor is evident in terms of the sharp rising trends of both NR and SR consumption and production in recent years. The gap between local output and demand has to be met by imports.

Natural rubber consumption and production in China, 1960–2007

Synthetic rubber consumption and production in China, 1960–2007

How do we measure the China factor? One way to do this is to look at the growth of world rubber consumption, including and excluding China. As can be seen, the influence of China was once negative in the 1970s and early 1980s. The China factor became positive, but was still relatively small, in the 1980s and early 1990s. It has since taken off. Part of the extra rise in consumption may be the result of a reduction in rubber consumption elsewhere (increasing exports of rubber end uses from China), but it is largely the result of increased domestic demand for rubber end-uses. Excluding China, world rubber consumption would have been 2–3% lower in 2003–2007. The rapid expansion of the Chinese economy and in particular its automotive industry has resulted in an explosion in tyre demand and has created a severe global shortage of not only natural rubber (NR), but also steel cord and other essential raw materials. A similar exercise can also be employed to calculate the China factor with respect to NR and SR production. The China factor, which has become extremely important during the last few years, is expected to continue to be an integral factor in coming years.

Growth rates of world rubber consumption, including and excluding China,

1970–2007

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