FAR EAST/THAILAND: Asean rubber producers will cut exports

Global rubber prices are expected to recover this year after Vietnam in late-Feb. 2016 agreed to join forces with three other Asean rubber producers to cut exports.

Bundit Kerdvongbundit, vice-president of Von Bundit Co, said the International Rubber Consortium agreed on plans for Thailand, Indonesia and Malaysia to cut their rubber exports by 15% each over the next six months to reduce supplies and boost prices.

The three countries also agreed to increase domestic consumption of rubber including for road and railway construction.

Bundit, also secretary-general of the Thai Rubber Association (TRA), said Thailand would cut exports by 300,000 t, Indonesia by 210,000 t and Malaysia by 30,000 t. Last year, Thailand exported 3.8 million t of rubber, followed by Indonesia (3.7 million t), Vietnam (1 million t) and Malaysia (400,000 t). The four countries contribute 70% of global rubber production. Vietnam still needs approval from its policymakers before it can cut exports by the same rate of 15%.

Global rubber prices have been languishing near their lowest level since 2009 due to a supply glut and weak Chinese demand. The price of unsmoked rubber sheet is now quoted at only 45 baht/kg, which is well below Thai farmers' production costs of 55-60 baht.

Thailand now produces about 4.5 million t of rubber a year, followed by Indonesia (3.7 million t), Malaysia (700,000 t) and Vietnam (1.1 to 1.2 million t).Global rubber production amounts to 12.5 million t.

Bundit said rubber supply would be also limited from March-June when rubber trees shed their leaves and farmers halt tapping. Thai rubber production is expected to drop by 5% or 250,000 t this year, while the country is committed to felling 200,000 to 300,000 rai of plantations a year from 19-20 million rai nationwide, he said.

Von Bundit on 29 Feb. 2016 signed a memorandum of understanding with Qingdao Runlian Co, Shanghai Han Qing Import & Export Co and Shanghai Ting Qing Industry Co to sell 110,000 t of rubber products worth 3.85 billion baht. It was signed on the sideline of a business-matching event for rubber products hosted by the Commerce Ministry. There were 147 potential buyers from 28 countries at the event, which is expected to create transactions worth 10 billion baht.

Commerce Minister Apiradi Tantraporn said her ministry had teamed up with other state agencies including the Agriculture Ministry and the TRA to hold roadshows in international markets.

Russia has shown interest in buying 80,000 t of Thai rubber products.

Source: Daily “The Bangkok Post”, Bangkok; 1 Mar 2016
(Syed Rashid Ali, Karachi, Pakistan)