TREND OF RUBBER

Sun (Auckland), Volume II, Issue 353, 14 May 1928, Page 12

TREND OF RUBBER

REASONABLE LEVELS EXPECTED VIEWS OF ENGLISH CRITICS Imports of rubber into Great Britain for April were down £2,013,000 on the figures for the corresponding period of last year, according to a recent cable. Indications are, however, that the market has reached bedrock, and that a healthier tone prevails. London quotations at the close of last week at 10Jd were slightly better than those for the previous week. Commenting on the future of the rubber market following the recent announcement of the proposal to remove restrictions on output a critic in the “Financial Times” stated: “Rubber restriction in effect is gone, although its unhonoured obsequies are deferred six months; but there is no need to fear that the industry itself is a dying one. Far from it. Phoenixlike, it will ultimately emei\3 from the ashes of Government red tape infinitely healthier for its regained freedom. “Rubber is indispensable, and cheap producers are absolutely certain to come out right in the end,” commented another critic. In the long run the market must find its true economic level. This may be around Is or a little more, but in any case it will be enough to yield well situated and well managed companies a return of at least 10 per cent, on their outlay. With an assurance of a long period of reasonable prices, new uses for rubber should be developed, and extravagant retail nrices for many of the manufactured products should come down, writes another critic jn the “Times.” Despite the fact that the consumption of rubber is increasing at a rapid rate —returns for 1927 being more than double those for 1921—there are several factors operating to keep the market at a reasonable level. Chief among these is the increasing competition from Dutch and other unrestricted growers, and the growing use of reclaimed rubber which must, as time goes on, tend more and more to keep the market for the crude product from soaring to any great heights. An indication of the rate of production of crude rubber and the trend of prices over a period of years can be taken from the following table:

The coming into production of more and more plantations every year has had the effect of lowering the market, despite the increasing demand. If “reclaimed” consumption be added to crude consumption, the increase in rubber consumption since 1921 becomes more striking, the figure of approximately, 770,000 tons being arrived for last year. The use of reclaimed rubber has increased rapidly over the past few years, an estimate of the American absorption alone for 1927 placed it at 190,000 tons, against 164 tons in 1926 and 90,000 tons in 1925. Spread over the various countries of the world, consumption in U.S.A. appears to be remaining at a comparatively steady level, while consumption elsewhere is mostly on the up-grade. The States, however, still account for approximately two-thirds of the world’s consumption of crude rubber. The following table gives an estimate of the distribution of raw rubber during recent years:

Viewing the position through the eyes of English critics, it is safe to assume that the recent drop in the market for the crude rubber will be reflected in the retail price of the manufactured product in this country toward the end of the year. One critic has already gone so far as to predict a drop in the price of tyres of 20 per 2??i* * s certainly safe to assume the n ® xt Slx months at least, the tendency for the market for the manufactured article will be down-

Year. Production. Average Consumption. Price. Tons. Tons. s. d. 1921 .. £294,000 265,000 0 10£ 1922 .. £380,000 390,000 0 91 1923 .. £413,000 430,000 1 3£ 1924 .. £421,000 470,000 1 2 1925 .. £516,000 552,000 2 9J 1926 .. £617,000 545,000 2 0 1927 .. £598,000 578,000 1 6g

1927. 1926. 1925. America . . Tons. 366,000 Tons. Tons. Great Britain . 44,000 36,500 37,000 Germany . . . 38,000 23,000 10,000 10,000 Russia C « . . Canada. • . . 13,000 26,500 7,000 20,000 7,000 20,000 Other countries 24,000 21,000 14’, 000