* Rubber demand seen rising 4.4 pct y/y- IRSG
* Prices to bottom out in 6-12 months - Olam CEO
* High inventory, weak TOCOM weigh on rubber prices
(Recasts with Olam CEO comments, prices)
By Rajendra Jadhav
KOCHI, India, Feb 20 Global rubber consumption
is likely to grow faster in 2014 on rising demand from Asia,
which along with an expected draw down in massive stockpiles by
top consumer China may trigger a rebound in prices, senior
industry officials said on Thursday.
The industry's optimism comes amid a tumble in tyre-grade
prices to multi-year lows on persistent worries about a slowing
economy in China, its high inventory and weakness in benchmark
rubber futures in Tokyo Commodity Exchange (TOCOM).
The weak rubber market has even prompted the International
Rubber Consortium (IRCo), which represents main producers
Thailand, Indonesia and Malaysia, to recommend the commodity not
be sold at the current low prices.
Prices will bottom out in the next 6-12 months as demand
from China could return following an expected run down of its
stockpiles, said Sunny Verghese, chief executive of commodity
trader Olam International.
"If China grows at 7-7.5 percent, we should see rubber
demand coming back," Verghese said on the sidelines of a rubber
conference in the southern Indian state of Kerala.
"Excess stocks currently present will take 6-12 months to
work out, after which we will see a more balanced supply-demand
Inventory in warehouses monitored by the Shanghai Futures
Exchange has risen to its highest since 2004, while
closely-watched stocks in bonded warehouses in the port of
Qingdao have jumped more than 11 percent in the past month to
around 340,000 tonnes. SNR-TOTAL-DW
China'a automobile market, the world's biggest, could post
double-digit growth for a second straight year, growing 8 to 10
percent in 2014, the China Association of Automobile
Manufacturers has forecast. The auto industry is the top user of
The International Rubber Study Group (IRSG) expects rubber
consumption to rise 4.4 percent in 2014 after posting a 2.5
percent increase last year, driven by demand from Asia.
Demand for natural and synthetic rubber will hit 27.7
million tonnes this year, while consumption in India is likely
to rise 8.5 percent to 1.56 million tonnes as auto demand is
expected to rise.
"Based on IMF data we are expecting China's consumption will
rise in 2014. So far there is no indication of slowdown in
demand from China," Stephen Evans, the group's
secretary-general, said in a presentation at the India Rubber
Meet in Kochi.
Singapore-based IRSG issues forecasts based on several
economic scenarios and the current year's estimate relies on the
International Monetary Fund's (IMF) global economic growth
IMF predicts China's economy should grow 7.5 percent this
year, and 7.3 percent in 2015, but recent data has revived
concerns over the country's economy.
Tokyo rubber futures tumbled more than 4 percent on Thursday
as downbeat China factory data raised concerns about falling
demand and spurred stop-loss selling on TOCOM.
(Editing by Muralikumar Anantharaman)