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12. October 2006

THAILAND: Rubber firm bounces back as prices rise

Source: Daily "Bangkok Post", Bangkok; 12 Oct 2006

The local smoked-rubber maker and exporter Sri Trang
Agro-Industry Plc, says it expects to return to profit
this year, helped by high rubber prices and strong
demand.

''We did quite well in the first half and we expect a
net profit of 500 million baht this year. That's a
conservative estimate,'' executive director Kitichai
Sincharoenkul said yesterday.

Sri Trang Agro reported a first-half net profit of 473
million baht, almost triple that of the same period
last year. It reported a net loss of 173 million baht
for the whole of 2005.

About 70% of the company's revenue comes from RSS3
smoked-rubber sheet, used mostly in the tyre industry.
The rest comes from latex exports for medical gloves
and other byproducts.

High crude-oil prices and strong demand from China,
the world's biggest rubber consumer, should keep
prices high, in a range of US$1.75 to $2 per
kilogramme and help boost the company's sales, Mr
Kitichai said. World prices averaged more than $2 per
kg in the first half.

''Prices have been fluctuating due to oil prices and
rains, so we cannot forecast confidently for the
second half,'' Mr Kitichai said. ''But they should
remain high at the level that we can make profits.''

Rubber prices rose strongly in the second quarter
because unusually wet weather disrupted tapping and
reduced rubber supply in Thailand, the world's largest
producer.

This was also supported by high oil prices as more
expensive oil usually drives a shift to natural rubber
from synthetic rubber, a petroleum product. Natural
rubber prices hit a record 102 baht per kg in late
May, but have fallen since to around 60 baht as supply
has improved.

He said he expected prices to rise again later this
year as more rains were expected to hit southern
Thailand, which produces around 90% of the country's
rubber.

Due to the bullish outlook, shares of Sri Trang (STA)
have risen 36% this year while the main Stock Exchange
of Thailand index has fallen 2%. The shares closed
yesterday at 15.10 baht, up 20 satang, in trade worth
3.75 million baht.

Sri Trang has an annual capacity of 156,000 tonnes of
RSS3 in Thailand and competes with domestic rivals
such as Thai Hua Rubber and Thai Rubber Latex.

Mr Kitichai said the company's 80% -owned new rubber
plant in Indonesia, with a monthly production capacity
of 2,000 tonnes of tyre-grade SIR20, would start
production in November and would boost profits in the
fourth quarter and next year.

The company planned to issue one-billion-baht worth of
bonds in the first quarter of 2007 as part of its plan
to issue up to five billion baht in bonds over three
years for working capital, he said.




(Syed Rashid Ali, Karachi, Pakistan)

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