May 06, 2015 (LBO) – Sri Lanka’s rubber production declined for the third consecutive year with weak international demand and adverse weather conditions affecting the industry, the Central Bank said.
“Rubber production dropped by 24.4 per cent to 98,573 metric tons in 2014 from 130,420 metric tons in 2013,” the Central Bank 2014 Annual report said.
“The decline was largely due to continued dry weather conditions during the first half of the year and the heavy rains in the third quarter, which disrupted latex tapping,”
“The production of sheet rubber, which accounts for nearly 50 per cent of the total production, declined significantly by 22.7 per cent to 48,539 metric tons, while the production of latex crepe accounting for 12.0 per cent of total rubber production, reduced by 23.0 per cent to 11,832 metric tons in 2014.”
This shortfall and lower prices in the international market led domestic rubber product manufacturers to rely on imported rubber, the report said.
“Import of rubber increased to 29,220 metric tons in 2014 from 11,150 metric tons in 2013,”
“Furthermore, rubber smallholders affected by the decline in rubber prices slowed tapping operations resulting in the reduction of smallholders share in total rubber production,”
However the CB report says, despite lower domestic production of natural rubber, the rubber and plastic products sub sector increased 7.1 per cent with an increase in raw rubber imports, which were used as an input for the manufacture of rubber product exports during the year.
“This growth was further supported by external demand for rubber tyres, tubes and other rubber based products.”
According to the report natural rubber production in Asia, catering around 95 per cent of the world demand for natural rubber has fallen by around 3 per cent to 10.8 million metric tons in 2014.
“While stockpiles in China and Japan have increased,”
“Weakening crude oil prices prompted the demand for synthetic rubber placing further downward pressure on natural rubber prices,”
“Decline in natural rubber prices caused smallholders in major producing countries to switch over to other crops or shifting to other agriculture activities leading to a reduction in production,”
“Reflecting international developments, rubber prices at the Colombo Rubber Auction also declined to lowest levels in 2014 continuing the decreasing trend witnessed during the recent years,”
“The highest decline of 24.1 per cent was seen in ribbed smoked sheet 1, while prices of latex crepe 1X and scrap crepe declined by 22.0 per cent and 22.4 per cent, respectively in 2014.”
Meanwhile, global natural rubber prices showed a steep decline in 2014 reflecting the slowdown in global demand and large stockpiles accumulated in major consuming countries, the report said.
“The average price of natural rubber per metric ton in the global market declined by 30 per cent to US dollars 1,956 in 2014 from US dollars 2,795 recorded in 2013,”