Higher Rubber Prices Expected for 1Q18 … But Full-Year Average should be Watched (Current Issue No. 2886 Full Ed.)

KResearch views that rubber prices will likely rise during the first quarter of 2018 (‘1Q18'), given positive factors that include rising demand from China to feed their auto production, and from Malaysia for medical glove manufacturing, though they would be seasonal factors. Other stimulus would include the implementation of various public works projects wherein rubber products are needed. However, rubber prices may face further challenges beginning 2Q18, especially around the 2018 yearend when Thai rubber supplies typically enter the market, plus a possible negative factor wherein the Chinese economy is expected to slow slightly from this year's pace.

To deal with volatile rubber prices using various assistance measures for rubber growers will be a matter of concern for the government, particularly between 2Q18-4Q18. As for the farmers, they may explore new techniques in plant management, e.g., crop rotation to other produce that generate good returns, or planting multiple agricultural produce on their otherwise single-crop plantations. They may also seek to earn more money from other activities.

Domestic supplies should be supervised to better match demand, and newer technologies should be investigated to add value to rubber products. As for the rising trend in investment toward rubber tire manufacturing here in Thailand, it is hoped that this will help stabilize rubber prices over the long term.