Rubber Supply to Miss Forecast This Year on Rain, Group Says

Natural rubber supply will expand less than forecast this year after unseasonal rains disrupted tapping and growers cut output on reduced demand from China, the Association of Natural Rubber Producing Countries said.

Production from members, representing 93 percent of global supply, may rise 1.1 percent to 10.42 million metric tons, less than the 2.6 percent gain predicted last month, the group said in its monthly bulletin today. Production increased 8.6 percent to 10.305 million tons in 2011, it said.

Limited supply may help extend a 24 percent rally in futures in Tokyo this year, potentially increasing costs for companies such as Bridgestone Corp. (5108), Michelin & Cie. and Goodyear Tire & Rubber Co. (GT), the top three tire makers.

“Prices are expected to improve at a slow pace driven by supply concerns extending beyond the wintering season,” the group said. While the global economy showed signs of improvement, the recovery seems to be slow and hesitant, it said.

Output may remain ‘low’ during April and May as farmers resume tapping after the low production period, the group said. Production fell 5.1 percent in the first quarter, it said. Demand for natural rubber from members, representing 57 percent of global demand, may rise 4.5 percent this year to 6.44 million tons, according to the group.

To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

To contact the editor responsible for this story: Ovais Subhani at osubhani@bloomberg.net

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