A Bright Future for Rubber

The demand for natural rubber closely tracks the performance of the economy. As global GDP grows, consumption and hence the need for natural rubber grow too. The recent economic surge worldwide therefore predicts a bright future for natural rubber demand.

Furthermore, major developed economies are spending more on infrastructure, which will increase the use of rubber in construction and other sectors. Germany plans to spend a record USD325 billion on transport infrastructure alone between 2016 and 2030, while the United States is considering a USD1.5 trillion infrastructure investment plan.

Continued urbanisation in developing countries also means that about two-thirds of the world’s population will live in cities by 2050, necessitating the use of more rubber. In parts of India and Malaysia, governments are paving roads with a combination of natural rubber and asphalt to produce better quality roads and reduce maintenance costs.

Other emerging trends, as discussed here, have added extra engines to the accelerating use of natural rubber.

As the World Economy Grows

In 2017, every major country and region in the world grew economically, from China to Europe to the United States to Latin America. Globally, the economy grew by 3.7%, its fastest pace since 2010. In January 2018, the International Monetary Fund also revised its global growth forecast for 2018 and 2019 to a higher 3.9%.

This booming health is expected to spur greater demand for natural rubber. The International Rubber Study Group projected that the demand for natural rubber will grow by up to 3.3% annually by 2020. This does not reflect the recent revised global growth forecast as mentioned above.

With the Rise of E-Commerce

Any improvement in the economy is usually followed by an even larger increase in the demand for the material, because it is used not only in goods and the machines to make those goods, but also in the tyres for vehicles to deliver those goods.

The rise of online shopping has further intensified the link between consumption and natural rubber demand. Where a person might have driven to a shopping centre to purchase a few items previously, he or she can now go online and order items from around the world, necessitating multiple vehicles to deliver them.

In 2017, e-commerce giant Amazon clocked 214 million km in last-mile delivery trips in India alone. This distance is equivalent to that of 556 trips from Earth to the moon.