THAILAND: Rubber exports could fall 20% in value this year

Luckchai Kittipol, honorary president of the Thai Rubber Association, said rubber prices will likely edge up in the second half of this year.

Prices of ribbed smoked sheet rubber No.3 (RSS3) averaged 80 baht a kilogramme in the first quarter.

"Demand remains under pressure from the sluggish world economy and hefty stocks maintained by foreign buyers,” said Mr Luckchai.

"We expect global stocks to be lower in the foreseeable future, as buyers are increasingly concerned the US will wind down its quantitative-easing measures.”

Among the factors that may affect the rubber industry in the second half is China's economy after Beijing was reluctant to implement new stimulus measures and no large construction projects have been announced.

Currently, China is the world's largest rubber user, importing more than 3 million tonnes last year, half of them from Thailand.

Mr Luckchai said China may import up to 1.6 million tonnes of Thai rubber this year.

Overall, the country is expected to ship 3.2 million tonnes, a marginal increase from 3.1 million tonnes last year.

Other markets for Thai rubber exports are Malaysia, Japan and the US.

The shipments will fetch an estimated 280 billion baht, down by 20% from last year.

Thai rubber production, meanwhile, is forecast at 3.8 million tonnes, up from 3.6 million tonnes last year.

In the first four months, Thailand shipped 1.13 million tonnes, up by 9.2% year-on-year but down by 8.6% in value to US$3 billion.

In a related development, the Thai government said it will not extend restrictions on exporting the commodity after the measure ended last Friday (31 May 2013).

Thailand, Indonesia and Malaysia had originally agreed to cut exports by a total of 300,000 tonnes from October.

That scheme ended in March, but Thailand said it will continue the curbs for another two months to the end of May.

"There is no point in continuing the measure, as it has had very little impact on the rubber market and prices have already rebounded through market mechanisms,” said Amnuay Patise, an adviser to the deputy agriculture minister overseeing rubber.

Benchmark Thai RSS3 hit a record high of $6.40 per kg in February 2012 before weak global demand pushed prices down to less than half that value at US$2.75 by mid-year.

That prompted the export curbs last October by what were then the top three rubber-producing countries.

The curbs allowed Vietnam to overtake Malaysia last year to become the third-biggest exporter.

Rubber prices started to rebound in April after the dry season in southern Thailand, the country's main rubber region, had cut supply substantially.

Source: Daily "Bangkok Post", Bangkok; 3 June 2013(Syed Rashid Ali, Karachi, Pakistan)