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THE INDIA RUBBER WORLD 



[February i, 1908. 



PRICES OF RUBBER AND THE DEMAND. 



THERE have been some expressions of surprise, in 

 rubber planting circles, that the decline in the 

 selling price of rubber during several months past 

 has not already led to a largely increased demand for the 

 material. This was due to the idea that, with lower 

 prices than have prevailed of late years, rubber might 

 become available for new uses from which it has been 

 barred by its high cost. Such increased demand would 

 presumably check the decline lately started and perhaps 

 give the market an upward turn. 



Speaking generally, this theory has a basis in reason, 

 and no doubt manv manufacturers could mention lines 

 of rubber goods the sale of which might be largely in- 

 creased if they were produced at prices lower than what 

 are now regarded as standard. But every important new 

 departure in the industry requires time for developmnt. 

 In the matter of rubber tiling, for example, which has 

 been referred to as a line which might come into much 

 wider use with lower priced rubber available, manufac- 

 turers would have to be better assured than they now 

 are that rubber is to remain on the present basis of 

 cost, and possible new consumers would require a sim- 

 ilar assurance before buying freely. But the mere faci 

 that rubber sells for less to-day than one year ago has 

 no bearing upon what it may cost six months hence. 

 A continuation of the present price level, however, for 

 two or three years, might justify the belief that the era 

 of "dollar rubber" was at an end, and gradually the trade 

 could adjust itself to the condition of cheap supplies. 



It should be understood that the demand for rubber 

 is not automatically controlled by fluctuations day by day 

 in the market for crude. Nor do prices of rubber goods 

 follow closely the rise and fall of prices of raw ma- 

 terial. There is reason to believe that a large proportion 

 of the raw rubber now going into use was bought at 

 a much higher figure than current quotations. Manu- 

 facturers, in fact, appear on the whole to be so well 

 stocked that the lowest recent prices do not encourage 

 them to buy. But rubber bought at to-day's prices will 

 not reach the consumer, on an average, short of several 

 months to come, and not until then could the manufac- 

 turer offer better discounts than now. Those factories 

 which turn out goods for store doubtless have in hand 

 now stocks made of crude rubber bought at the highest 

 price of the past year. 



But for the encouragement of the rubber planter it 

 may be suggested that when people really want rubber 

 goods high prices do not deter them from buying. At 

 no time in the history of the industry has the consumption 

 of rubber been so great as in the past two or three 

 years of unpreccdentedly high prices. The new automo- 

 bile tire industry, in particular, may be mentioned as hav- 

 ing been built up under these conditions. It is doubtful 

 whether lower prices for rubber would increase greatly 

 the sale of tires : people who require them will pay what 

 is asked, and other people will hardly buy at any price. 



Just now the buying of all goods, including rubber 

 manufactures, is on a reduced scale in many countries, 

 whatever may be the reason, involving a check upon the 

 production of goods, all of which has tended to lower 

 the price, among some other raw materials, of india- 

 rubber. Such conditions have occurred before and may 

 be looked for again, and when a revival of trade comes 

 it is only reasonable to expect that the demand for rub- 

 ber will more nearly approach the volume of supplies 

 than at present. Should the net result be a long contin- 

 ued low range of prices, we repeat that the ultimate re- 

 sult is likely to be a demand in new directions, with a 

 tendency to advance prices of the raw material. 



THE CONDITION OF THE TRADE. 



AS having a bearing upon the business situation, it 

 may be mentioned that the exports of crude rubber 

 from Para during 1907 were largely in excess of 

 those for any previous year, and 71 per cent, larger than 

 for 1898. \\'hcther the production of standard grades 

 of rubber from the rest of the world has increased pro- 

 portionately is doubtful, but there has been an increase. 

 But visible supplies of rubber are not much greater 

 now than ten years ago, which points to a great in- 

 crease in consumption. 



The above figures relate only to grades that have been 

 standard all the while. Meantime there has been a 

 marked increase in the production of pontianak gum, of 

 Mexican guayule, and latterly of plantation rubber, the 

 total of which sorts is very large. Similarly there has 

 been a very great increase, proportionatel)-, in the output 

 of reclaimed rubber, which is now produced of better 

 quality, and has become available for many purposes in 

 the industry in which formerly its use w^as unknown. 

 That the world should now demand so nuich more rubber 

 than ten years ago is a most encouraging fact for the 

 trade. 



It has been observed that when the use of rubber be- 

 comes general for any particular purpose people are not 

 apt to give up that use readily. Whoever becomes ac- 

 customed to wearing rubber overshoes continues the 

 habit ; the railroads which have adopted airbrakes mutt 

 continue to buy hose for them ; and the number of cities 

 and towns having fire departments adds continually to 

 the general demand for fire hose. No matter what the 

 general business situation, therefore, the demand for 

 rubber goods continues, though it may now and then be 

 less active. 



Such considerations as the above help to explain the 

 generally optimistic views held in the rubber trade. The 

 manufacture and sale of goods may be less active now 

 than for some time past, but those large buyers who re- 

 frain from placing orders now, for any reason, must 

 place them some time, so that in the end the average rate 

 of consumption will be maintained. It has been said be- 

 fore, of business depressions in America, that the rubber 



