Rubber demand to slow in 2012 in China on weaker auto sales image

Demand for natural rubber in China, the world’s largest consumer, may slow in 2012 due to weaker economic growth and auto sales.

According to an executive at Okachi & Co., the largest broker for rubber contracts on the Tokyo Commodity Exchange, rubber prices may face the biggest annual decline in three years.

“There’s growing concern that the whole economic situation will face downward pressure in the first quarter next year because of weak economies in both emerging and developed countries,” Lizhi Tang, president of Okachi’s greater China region, was quoted as saying by Bloomberg.

Due to slower demand, rubber prices could decline 33 percent this year, the biggest drop since 2008. Higher supply from manufacturing countries such as Thailand, combined with the deepening sovereign debt crisis in Europe and slowing growth in the U.S. are the factors to blame. China made up about 34 percent of global rubber demand last year, according to the International Rubber Study Group.

“Growth in China’s demand for natural rubber next year is poised to slow down amid sluggish new auto sales,” Li Shiqiang, general manager at Sri Trang Ltd., a unit of Thailand’s largest publicly traded rubber exporter, was quoted as saying by Bloomberg. China’s economy is expected to grow 8.5 percent in 2012, the least in 11 years, according to the OECD.