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22 Aug 2023


Thai rubber prices set to plunge to THB43.2/kg on average or 16.4% YoY in 2023 amid weakening global demand (Current Issue No.3428 Full Ed.)


        Thai rubber prices fell sharply during 7M23, as reflected in the decline of grade 3 raw rubber sheet prices to THB44.0/kg on average or 25.1 percent YoY, due chiefly to the weakening global demand, especially in China and the US. China is experiencing murky economic conditions and the slowing US economy has affected its automotive production. Additionally, Malaysia’s massive stocks of rubber gloves have pressured purchase orders of rubber from Thailand. These factors have caused Thai rubber prices to plunge in line with falling global oil prices.

        Looking into the remainder of 2023, it is expected that Thai rubber prices will decline further to approximately THB42.0/kg on average as global demand is projected to slow down, particularly in China. Meanwhile, lower rubber supplies from Thailand, Indonesia and Malaysia due to the impacts of El Niño may not cause rubber prices to fall at a fast rate, and grade 3 raw rubber prices in 2023 may decline to THB43.2/kg on average, or 16.4 percent YoY.
        Regarding the Thai rubber business in 2023, it is expected that turnover within the midstream rubber business will decline because of fewer purchase orders. As El Niño is expected to cause rubber outputs to drop towards the end of 2023, the midstream rubber business may lose some income at this time because of the underutilized plant-capacity costs. Such picture will be seen largely during the remainder of 2023, and the related impacts may cause income of primary rubber exporters to decline, as well. Moreover, the rubber product business for export looks worrisome, particularly rubber gloves, because of the steep drop in their purchase orders after COVID-19 has eased. Meanwhile, rubber growers overall will have to endure financial hardship because of lower rubber production.
        In 2024, it is expected that rubber prices will increase slightly in line with tighter rubber supplies caused by the severe impacts of El Niño and anticipated growth in auto tire demand, particularly from the increased production of electric vehicles. However, Thai rubber prices may face several downside risks, including the fact that China is projected to import more rubber from CLMV, and stringent environmental measures to be implemented by Europe and the US. If Thailand fails to comply with these environmental measures, demand for Thai rubber might be at risk.

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