Supply and Demand of the Rubber market

Supply and Demand of the Rubber trade2.0 IntroductionNatural hawkshaw crossroad such as raw synthetic prophylactic and hevea wood products are kinds of world bulk industrial raw material they are scare, deficient and strategic resource important for national vindication and industrial construction. Due to the shortfall of prophylactic tag on and climate changes in the rubber-producing countries, add together resource of natural rubber has been decreasing annually and it makes global market suffering from significantly high price of the rubber (Hanim Adnan 2011).The insufficient supply of the natural rubber has bought various issues to the rubber market and it has brought contri howeverion to the economics of Malaysia. at that placefore, pertinent economic theories will be used to discuss in the natural rubber issues. This report will examine in the concepts of have, supply, shortages, market equilibrium, and elasticity. Besides, well label diagrams will be including in th e later paragraph to explain the whole concepts.3.0 Analysis3.1 DemandThe effects of shift in demand on rubber market count on 1.1D0D1S0P1P0Q0 Q1 standard scatheDemand can be defined as An economic measure, which shows an unlimited desire, as well as the superpower to buy for a products or services (Demand 2011).According to the executive officer of glove manufacturer Careplus Group Bhd Lim Kwee Shyan, demand surged because of making medical rubber gloves payable to growing hygiene awareness following the H1N1 pandemic. Therefore, it has become an essential product for the healthcare industry (Kian Seong 2010).Besides, there is a strong demand for tyres from China and India of the motorcar sector (Prices to Stay High on Ongoing Tight supply 2011). Hence, ceteris paribus, there is a high demand to the natural rubber especially when the step-up of population and the healthcare awareness has elevated.From Figure 1.1, it shows the effects of shift in demand on rubber market. Further more, the number of buyer is a non-price determinant, when the buyers summation the measuring stick of a product they want to buy at a given price it makes the market demand curve shift to rightward from D0 to D1 in the Figure 1.1. Therefore, crude equilibrium price and the quantity demand increase from P0 to P1 and Q0 to Q1, respectively.3.2 SupplySupply can be described as The total amount of a product or service available for the customer to purchase at a given price (Supply 2011).Figure 1.2D0S0S1The effects of shift in supply on Rubber marketQuantityPriceP1P0Q1 Q0The extreme and changeable weather of Malaysia and the issues of global warming will affect latex flow and reduce the supply of the rubber. For example the higher temperature in the morning and unpredictable natural disaster which are detrimental to the rubber trees (Admin 2011).Malaysia now was facing the shortage of rubber clones imputable to the changeable weather and over-tapping the rubber trees which raise the problem of supply shortage (Jack 2011).Expectation of producers is a non-price factor so it shifts the supply curve to the leftward from S0 to S1. However, the quantity of rubber supplied decrease from Q0 to Q1 because of weather problem and unable to produce at given output, resulting in increase price of rubber from P0 to P1 shown in Figure 1.2.3.3 ShortageFigure 2.1ShortageQ Q1 QQuantityThe Effects of shift in demand on rubber marketPricePnP0ED1S0D0Figure 2.1ShortageQ Q1 QQuantityPricePnP0ED1S0D0The Effects of shift in demand on rubber marketThere is excess demand and the supply for the natural rubber is limited, it brings the resulting of shortage which has consequently led to price increase in the Malaysia since 2008 (World rubber supply tight, but price outlook bullish 2010).From Figure 2.1, at P0, as demand shifts from D0 to D1, it shows the demand has increase and the equilibrium price has move from P0 to Pn shows that the quantity of supply also increase. However, in the Fi gure 2.2, the supply shifts from S0 to S1, which means decrease in supply and the equilibrium price has increase from P0 to Pn and decrease in quantity demanded.As a conclusion, through Figure 2.1 and Figure 2.2, both of them showed a shortage which is the shaded theatrical role where the quantity demanded (Q1) exceeds quantity supplied (Q0). Besides, an upward pressure fall on the price of rubber due to the shortage and when the price is at Pn resulting a new equilibrium, dit E and the quantity demanded is at Q1, as shown in Figure 2.1 and Figure 2.2.3.4 Market Equilibrium Changes in EquilibriumEquilibrium described as in a market occurs when the price balances the plans of buyers and sellers (Hubbard, 2009).Bernama stated that the prices of natural rubber will continuously rise in this year but the output of the natural rubber in February has drop if compare to January whereas the demand increase in world markets (February Rubber Output down 15.8 Per Cent 2011).Figure 3.1S1SDD1 P1P0QQuantityPriceSupply Demand for Rubber marketIn the change in equilibrium, there is increase in Demand and decrease in supply. There Therefore, the demand curve shift rightward from D to D1 and supply curve shift leftward from S to S1, as shown in Figure 3.1. The new equilibrium price increase and move from P0 to P1. But there is no change in Quantity. The equilibrium price rise up but quantity is indeterminate.3.5 SubsidySmallholders can5.0 reference work ListsAdnan, Hanim. 2011. Right time for renewed interest in rubber sector. The Star.http//biz.thestar.com.my/news/story.asp?file=/2011/4/5/business/8412507sec=busi ness (Accessed April 1, 2011).Demand. 2011. Investor Glossary. http//www.investorglossary.com/demand.htm (Accessed April 1)..Kian Seong, Lee. 2011.Careplus gains 4 sen premium on ACE Market debut. The Star. http//biz.thestar.com.my/news/story.asp?sec=businessfile=/2010/12/7/business/756724 2 (Accessed April 2, 2011).Supply. 2011. Business Dictionary.com. http//www .businessdictionary.com/definition/supply.html (Accessed April 2, 2011).Admin. 2011. Global warming threat to natural rubber. Srilankan rubber Industry. http//slrubberindustry.com/2011/01/19/global-warming-threat-to-natural-rubber/ (Accessed April 2, 2011)Jack Wong. 2011. Rubber board unveils planting scheme. The Star. http//biz.thestar.com.my/news/story.asp?file=/2011/3/29/business/8364614sec=business (Accessed April 2).World rubber supply tight, but price outlook bullish. 2010. Bloomberg. http//www.engineeringnews.co.za/article/global-outlook-for-rubber-supplies-are-bullish-2010- 02-12 (Accessed April 3, 2011).February Rubber Output Down 15.8 Per Cent. 2011. Bernama. http//www.bernama.com/bernama/v5/newsbusiness.php?id=578466 (Accessed April 12, 2011)