"All indications are that latex prices will remain high and possibly go higher in the future. 85% of the world's rubber output is used as hard rubber while latex rubber represents only about 15%. Roughly 85% of the hard rubber is used by the tire industry. Today, the price of rubber is driven by oil prices, and by worldwide demand for tires. Tires are made with a combination of natural and synthetic (oil based) rubber. Tire manufacturers can change the blend within some broad parameters but these are the key materials. As oil prices go up, the cost of synthetic rubber goes up. If the price of oil is high, manufacturers will choose to use more natural rubber to control costs, pushing up natural rubber prices until the two are again in equilibrium.
Oil, as everyone knows, is at an all time high. Meanwhile, worldwide demand for tires is increasing strongly. Particularly in China, a billion people are moving towards a middle class lifestyle, buying millions of new cars and motorbikes. Demand for rubber is strong and analysts expect demand will continue to grow sharply.On the supply side of the equation, there are short-term variables such as rain and weather that affect output and have reduced the supply of rubber trees this year. Over the longer term, it takes 6 years before a new rubber tree can be tapped. Rubber production is very labor intensive. Plantation owners find oil palm to be far more lucrative than rubber, even at these higher prices. Not enough rubber trees have been planted over the last few years to meet the anticipated growth in demand. Prices can be expected to remain high for the foreseeable future. "Author: medicalexamgloves.com