Rubber Study Group

Abstract

In the period following the Rubber Study Group's seventh meeting, May 2 to 5, 1950, press reports from western markets indicated that the fear (and the subsequent reality) of a world crisis had lead to heavy stockpiling of rubber and to speculative buying—both of which contributed to higher prices. London financial circles, while expressing the views that the Rubber Study Group's 1950 consumption estimates were too low and that the market could bear the high prices, were reported to have taken a conservative view of the boom, fearing that the unrealistically high prices might force the United States to activate more of its synthetic rubber plants and thus make the position of natural rubber producers less secure. A press release of June 9, 1950, revealed that the United States government had directed the attention of the world's rubber producing and marketing countries to the “serious implications” of the price movements and on July 7 the Reconstruction Finance Corporation reopened three United States synthetic rubber plants with a total annual production capacity of 88,000 tons. There was a definite break in rubber prices on the London market during the week following the release, on August 14, of estimates by the Rubber Study Group Secretariat which showed that the world production of rubber for June had exceeded consumption demands. This development, which press reports indicated to have been welcomed by industry representatives in London, was largely attributed to the cessation of “panic buying”.