The economies of India and China are growing and their consumption of goods is growing too. Many people feel that because of very strong growing demand from these two countries, the price of oil is so high. Of course, they are wrong because the India and China hardly consume any energy compared to the developed world. However, they are perhaps right about one commodity- natural rubber. The strong demand in India and China is raising the price of natural rubber too much. In fact, in 2005, these countries consumed 20% of global natural rubber production and they want even more. Major rubber producing countries are now finding it very difficult to meet the growing demand caused by these two giant neighbors.
You cannot eat rubber- you may wonder. Why all of a sudden they need so much rubber! It is because of the growing auto production in the two countries. Production of cars has increased a lot in China in the last two years. The same goes for India too. So, more cars mean more tires. And tires are made from rubber. India and China are among the notable producers of natural rubber too but their domestic production is too little to satisfy the growing demand.
Major producers like Thailand and Indonesia are now struggling to meet up the demand. Unfortunately, Thailand has a more than average wet season this time while Indonesia did not have enough rain. So, rubber production was not as much as expected this year. China and India are now keen to increase domestic production of rubber. However, that takes time and time is the only thing that they cannot afford to have at this moment.
What about synthetic rubber? I heard that it is a good alternate to natural rubber. Yes, I am right but the main ingredient to make synthetic rubber is crude oil. Even a child knows that the price of oil is outrageously high these days. So, those of you who still believe that China and India are the root cause of growing oil price will surely feel vindicated. I am sorry that I cannot share your enthusiasm.
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