158 



THE INDIA RUBBER WORLD 



December 1, 1920 



The Rubber Surplus and Its Relation to Future Tire Production 



By Richard Hoadley Tingley 



IN ARRiviNi, ai the world's position with respect to crude rubber 

 —and more particularly with respect to the United States, there 

 are many factors to be taken into account. As every rubber 

 man knows, there is a large surplus stuck in the world's market, a 

 very large portion of which is in this country. The e.xact amount 

 of the surplus and where held is a matter about which there is no 

 very definite knowledge. Each American importer and manufac- 

 turer seems to take the ground that the amount of his own per- 

 sonal holdings is a private matter to be kept as one of his trade 

 secrets, .\lthough almost anyone of them is willing to hazard a 

 guess at the total surplus— world a^d United States, none will go 

 much farther and the true amount is shrouded in more or less 

 mystery. 



On October 25, 1920, the Trade Xcws Service of New York 

 publisiied a statement bearing on this matter which is reproduced 

 as follows ; 



"In connection with views recently published as to the produc- 

 tion and consumption of crude rubber a number of opinions have 

 been given by factors in the New York market. While these are 

 for the most part of a bearish nature, there are but few conflicting 

 opinions since most of the statements are based on imports and 

 consumption for a known period, namely, the past nine months of 

 this year. 



".■\ccording to the statements of dealers there were 65,000 tons 

 of rubber in store in the United States on January 1, 1920, and 

 arrivals for the nine months ended September 30, 1920, amounted 

 to 192,000 tons, bringing into this market for the entire period a 

 total of 257,000 tons of crude rubber. 



"Consumption for the same period amounted to 165,000 tons, 

 estimating 15.000 tons 'or January up to 30,000 tons for May 

 when manufacturing was at its peak, and receding from that time. 



"If this estimate is to be accepted, a surplus would be shown 

 as of October 1, 1920, of 92,000 tons, and on the present limited 

 scale of manufacture, even with decreaased imports, there would 

 be an accumulation of rubber in this country at the end of the 

 present year in excess of 100,000 tons. 



"These figures represent not only stocks held in warehouses 

 but also those in the hands of manufacturers. It is estimated 

 that 30,00<1 tons are actually on spot at the present time in New 

 York, but of this amount considerable has already been sold and 

 it is difficult to estimate the amount actually available. 



"In arriving at the world's present supply the American trade 

 adds to the above amounts those quoted by the Rubl>cr Growers' 

 Association of London, August 31, 1920, of 33,000 tons held in 

 London, which is expected to reach 50,000 tons by the end of the 

 year. This, with the surplus stocks held in Singapore, Colombo, 

 Java, and in the Brazilian markets, gives a total world's surplus 

 of upwards of 200,000 tons.'' 



It is the purpose of this article to analyze this statement and 

 to ascertain how nearly it is correct ; to see where, how, and 

 when this surplus was rolled up. and to forecast, as well as 

 maybe, under what conditions and how long a time it ought to 

 take for the market to absorb it — for it is perfectly evident that, 

 until it has been in a measure used up, the rubber market will 

 continue to be in a more or less unsettled and dangerous condition. 



In 1917, J. S. M. Rennie, as quoted in London Times Trade 

 Supplement, foresaw an overproduction of rubber when he said ; 



"If some definite, strong action be not taken on behalf of this 

 industry, and native Asiatic residents, plantation companies, and 

 the powerful well-controlled American and British rubber goods 

 manufacturers are allowed to continue planting ad lib., it is not 

 difficult to foresee disastrous results to the industry, and the 

 ultimate result may easily be that in, say, ten years' time, we 



may find ourselves with a planted area of 4,200,000 acres which, 

 at 375 pounds per acre per annum, would give a total crop of 

 700,000 tons, and if the effective consumption at that time is 

 less than that quantity by so much as a hair-breadth, so to speak, 



Table I 



World Production. Consumption and Surplus of Rubuer 



(In long tons) 



(Reference to Graph A) 



(a and b) Production figures for 1912-1917, inclusive, are taken from 

 "The Rubber Industry," prepared by the War Service Committee of the 

 Rubber Industry of the Ilnited States. Amounts quoted for 1918 and 1919 

 are from The India Rubper World. 



WORLD PRODUCTION, CONSUMPTION AND 

 SURPLUSOF RUBBER 



the selling price must logically fall to the approximate cost of 

 production." 



What Mr. Rennie foresaw in 1917 as a possibility in ten years 

 from that time became an actuality, so far as price is concerned. 



