GTM Solutions Say Rubber Demand To Swell

Analysts at GTM Solutions have expressed their faith in rubber amid renewed optimism that a global economic recovery will increase demand for the commodity used to make tires.

GTM Solutions made their bold predictions last week as crude traded near a one-month high, boosting natural rubber?s attractiveness compared with its synthetic rival.

The Dollar Index traded at the lowest level this year after former Federal Reserve Chairman Alan Greenspan said the most severe U.S. recession in at least five decades may be ending.

Commodities analysts at GTM Solutions commented that rubber would continue to follow crude higher. Price gains were also supported by speculation that demand from automakers may increase as domestic rubber stockpiles drop, he said.

Last week saw crude contracts post the highest settlement since June 30, after the dollar fell and a report showed the U.S. economy shrank less than forecast in the second quarter, and GTM Solutions fully expect rubber to mimic the trend.

The U.S. economy contracted at a better-than-forecast 1 percent annual pace in the second quarter, the Commerce Department reported July 31. Stabilization of housing markets and consumer spending, a lessening of financial turmoil and increased government spending all suggest the longest recession since the 1930s may be close to ending.

Thailand, Indonesia and Malaysia, the three largest rubber growers, may deepen a planned supply cut this year as recession curbed demand, according to information referenced by GTM Solutions in their report.

The trio cut exports 540,000 tons in the first five months of the year, more than the 414,000-ton reduction planned for the first half, the GTM Solutions report said. The three will cut shipments as much as 48,000 tons a month in the second half.


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