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15 Jul 2005

Agriculture

Rubber Trade: Nothing to worry about, next 5 years, but after 2009 ...?

คะแนนเฉลี่ย

Rubber has been a prominent export commodity since 2004, and its future will remain bright until 2009. It is expected that the prices for natural rubber will be in good stead over the next five years because of the fact that the production of rubber has lagged behind the fast-growing demand. In addition, soaring crude oil prices make it costlier to shift to synthetic rubber, as the prices of synthetic rubber are also on the rise. As a result, it is not surprising that most analysts in the rubber market have anticipated that demand for natural rubber will outpace demand for synthetic rubber for the next few years.

Most analysts in the world market have projected that natural rubber production will not exceed 10 million tons before 2012, unless the major producers expedite production. Demand for rubber in the world market will rise to more than 10 million tons over the next 3-4 years, thus there is anticipation that demand for natural rubber will grow by more than 3.7 percent over the next five years. This implies that, by 2009, the rubber supply will fall short of demand by 230,000 tons. Such a shortage of natural rubber may intensify, so it is foreseeable that prices for natural rubber will continue to rise during the next few years.

Forecast for Rubber Production and Demand in the World Market
Thousand tons
2004
2005*
2009*
Production Volume
8,410

(5.3%)
8,780

(4.4%)
10,000

(4.0% p.a., average)
Demand
8,230

(3.5%)
8,690

(5.6%)
10,230

( 3.7% p.a., average)
Differential
180
90
-230

Source : * The forecast is compiled from analyses of the world rubber market

Remarks: (The figures in parentheses are the rates of change over the preceding year)

It is anticipated that in 2009, or over the next 5 years, there will be a lot more newly tapped rubber trees. Countries that are well worth watching with significantly expanding rubber planting areas include Thailand, China and Vietnam. Moreover, these countries have also invested in rubber plantations in neighboring countries, and Laos is one country that most foreign investors have invested in to expand their rubber planting.

Meanwhile, the production volume is increasing as a result of greater planting area, which in turn has been induced by the motivation of higher prices for latex. However, when considering the growth rate of demand for rubber, there are many factors that must be taken into consideration, particularly the expansion of the rubber tire industry, which is an important steady customer for rubber. It is anticipated that the automobile industry will not likely have the leaping growth it has experienced previously, and during the period 2004-2009 its growth rate may begin to decelerate. Therefore, it is possible that the trend of rubber shortage will become less serious, and finally a problem of oversupply may become a slumping price cycle for rubber again.

This is a warning signal that rubber producing countries must be careful of, and hasten to cope with any condition of volatile rubber prices. For the Thai government, the 'Rubber City' project must be expedited to focus on supporting steady customers that use rubber as a raw material. This guideline will create added value for the rubber industry by promoting the export of finished rubber products, instead of exporting it in the form of a raw material, as at present, and also create additional domestic employment. Moreover, the government must expedite the implementation of an international rubber joint venture company, which would have an important role in stabilizing rubber prices in the world market, because it would be a partnership of the important rubber producing countries of the world.

Agriculture

Rubber