THAILAND: Rebound seen for rubber prices

Secretary-general Apichart Jongsakul said unsmoked sheet rubber prices will increase to 80 baht per kilogramme in October from about 70 baht now. Statistics from the central rubber market at Songkhla show that unsmoked sheet rubber hit a record high of 132.43 baht in 2011 before weak global demand pushed prices down to a range of 90 to 93.83 baht at the end of last year and 73.79 baht on Friday (23 Aug. 2013). That prompted export curbs last October by what were then the top three rubber-producing countries. The curbs allowed Vietnam to overtake Malaysia 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. Mr Apichart said the price decline in the first half was due mainly to an increase in production by several countries while world demand has yet to recover.

China has stepped up its rubber production over the last five years as it seeks to meet rising domestic demand and reduce imports. Production has also risen in other emerging producers, particularly Vietnam, Laos, Cambodia and Myanmar. From 2008-2012, global rubber production increased by 3.7% a year, from 10.1 million tonnes in 2008 to 11.4 million last year. It is expected to reach 11.6 million tonnes this year.

Demand also increased by 3.1 % a year for the same period, from 10.2 million tonnes in 2008 to 10.9 million last year. It is projected to reach 11.1 million tonnes this year. Thai production from 2008-12 also increased by 3.57 % a year. This year's production is estimated to be 3.78 million tonnes, up by 5.95% from 3.58 million last year. Domestic demand is estimated at 550,000 tonnes this year, up by 10%.

The OAE forecasts a production surplus on the world rubber market of 450,000 to 500,000 tonnes a year in 2012 and 2013. Mr Apichart said the volume of Thai rubber exports will likely increase, but the value is expected to drop due to depressed global prices.

From January-May, Thailand shipped 1.68 million tonnes, up from 1.6 million in the same period last year. However, export value fell to 36.8 billion baht from 152 billion.Thai rubber exports to China, the world's major rubber importer, fell by 26.2% in volume, with the value also down by 49.3% due to the faltering Chinese economy. Thailand exported 1.2 million tonnes of rubber to China last year, accounting for 55% of China's total imports.

The government recently earmarked 5 billion baht to support farming cooperatives and community businesses and another 15 billion in soft loans via commercials bank to be extended to private firms agreeing to initiate projects that raise rubber's values.

Source: Daily "Bangkok Post", Bangkok; 26 Aug 2013
(Syed Rashid Ali, Karachi, Pakistan)