EIC sees an opportunity for the Thai rubber industry to refocus towards value-added rubber products such as rubber gloves.
Both the private and public sectors should collaborate on R&D for new products. There are also opportunities to partner with Malaysian companies interested in investing in the rubber glove industry.
The rubber industry struggled with falling rubber prices during 2014 – 2016. This year, the industry took a positive turn along with 3 significant developments. First, rubber prices are projected to rise in 2017 along with the recovery of crude oil prices and reduced supply from floods in the Southern provinces, putting an end to the downward trend in rubber prices.
The price of RSS3 remained low during 2014 – 2016, with an average price of 55-57 THB/kg. In 2017, the average price regained its upward trend to move above 60 THB/kg. The main contributing factor is a rebound in global crude oil prices, which recovered to a level of 50-55 USD/barrel from as low as 37 USD/barrel in early 2016 (Figure 1). The rise in crude oil prices has been driven by an OPEC production cut and the recovery of the global economy, especially the U.S. Additionally, floods in the Southern provinces of Thailand in late December 2016 to January 2017 restrained rubber supplies.
EIC sees the Thai rubber output in 2017 reaching 4.3 million tons, a 3% drop from the previous year. Lower Thai output, combined with a decline in global rubber production over the past two years due to unsuitable climate conditions, translates to a 7.1% drop in global rubber stocks this year at 2.6 million tons (Figure 2). These two factors contribute to higher prices, signaling an end to the downward trend. EIC projects an average rubber price for 2017 of 72.5-77.5 THB/kg, with the price gradually declining in the second half of the year after rubber trees have shed leaves and Thai rubber production returns to normal.
Nonetheless, rubber prices will not rise significantly in the medium term given the projection of a small increase in crude oil prices. An increasing rubber supply will also put pressure on prices in the medium term.
Even though the recent recovery in oil prices has contributed to the rise of rubber prices this year, the price of oil is capped by the potential supply from shale oil producers in the U.S. EIC expects oil prices to move within a range of 60-70 USD/barrel in the medium term, restraining future rubber prices. Furthermore, the rubber supply is projected to increase with a global rubber stock that will begin accumulating in 2018 (Figure 2).
The second development is the reduced role of Thai rubber suppliers in the global market, while suppliers in the CLMV countries step up their production. Accelerated expansion of rubber planting areas in the CLMV countries in 2006-2018 will greatly increase production levels in these respective countries in 2013-2025. The IRSG (International Rubber Study Group) expects CLMV’s rubber production to increase from 1.4 million tons in 2015 to 3.2 million tons in 2025. The increase will make the CLMV’s share of global rubber production jump from 11% in 2015 to 18% in 2025. At the same time, the share of Thailand’s production will decline from 34% of total global production to 25% in 2025 (Figure 3). The change is due to a shift to other crops by Thai farmers such as palm oil, which provides higher returns. Moreover, the Thai rubber industry is also losing competitiveness to those in the CLMV due to their cheaper labor costs.
Author: Pharadon Heemmuden
Thai fruit exports to FTA markets up 107 percent
China, Malaysia, Singapore, Indonesia, the Philippines, Hong Kong, Australia and Chile are top importers of Thai fruits, especially fresh durian, mangosteen, longan and mango. Thai exporters are able to benefit from FTA privileges.
BANGKOK (NNT) – Thailand’s fruit exports continue to increase, despite the sluggish global economy caused by the COVID-19 pandemic, with key trade partners being countries that have free trade agreements (FTAs) with the kingdom.
The Future of Asia: greener but with a public and private debt hangover
The COVID-19 pandemic has been a perfect storm, destroying jobs, worsening poverty and inequality, and creating a public and private debt problem—especially for countries and firms already in fragile financial health beforehand
50:50 campaign may not get immediate extension
BANGKOK (NNT) – The government’s 50:50 co-pay campaign expiring on 31st March may not be getting an immediate campaign extension. The Minister of Finance says campaign evaluation is needed to improve future campaigns.
The Minister of Finance Arkhom Termpittayapaisith today announced the government may not be able to reach a conclusion on the extension of the 50:50 co-pay campaign in time for the current 31st March campaign end date, as evaluations are needed to better improve the campaign.
Originally introduced last year, the 50:50 campaign is a financial aid campaign for people impacted by the COVID-19 pandemic, in which the government subsidizes up to half the price of purchases at participating stores, with a daily cap on the subsidy amount of 150 baht, and a 3,500 baht per person subsidy limit over the entire campaign.
The campaign has already been extended once, with the current end date set for 31st March.
The Finance Minister said that payout campaigns for the general public are still valid in this period, allowing time for the 50:50 campaign to be assessed, and to address reports of fraud at some participating stores.
The Fiscal Police Office Director General and the Ministry of Finance Spokesperson Kulaya Tantitemit, said today that a bigger quota could be offered in Phase 3 of the 50:50 campaign beyond the 15 million people enrolled in the first two phases, while existing participants will need to confirm their identity if they want to participate in Phase 3, without the need to fill out the registration form.
Mrs Kulaya said the campaign will still be funded by emergency loan credit allocated for pandemic compensation, which still has about 200 billion baht available as of today.
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