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THAILAND: Thai rubber exporters still bullish on China demand

Thai rubber exporters

Rubber exporters remain confident China’s economic slump will not affect demand for the commodity. Shipments to China, the world’s biggest user, have yet to feel any impact because there is strong demand from the car sector, said Luckchai Kittipol, honorary president of the Thai Rubber Association.

 

“The Chinese prime minister himself has recently reaffirmed that China’s economy is still in an expansion mode at 7.5% this year,” said Mr Luckchai. “China’s automotive industry continues to do well and its profit continues to grow.”

For the first five months of this year, Thai rubber shipments to China and Hong Kong amounted to 49.37 billion baht, up 9.49% from the same period last year. However, Thailand’s overall rubber shipments dropped 14.78% year-on-year to 106.62 billion baht.

Despite the export drop, Mr Luckchai said overall rubber exports are expected at least to be on a par with last year’s by volume but may fall by 20-25% in baht terms due to bearish global demand and the strong baht. China is expected to import about 1.8 million tonnes at best this year from Thailand, a rise from 1.6 million last year. Last year, China imported more than 3 million tonnes.

Thailand is expected to ship 3.2 million tonnes this year, a marginal increase from 3.1 million last year. Other markets for Thai rubber exports are Malaysia, Japan and the USA. The shipments will fetch an estimated 250 billion baht, down from 270 billion last year. Thai rubber production, meanwhile, is forecast at 3.8 million tonnes, up from 3.6 million last year. The government said in early June it would not extend restrictions on exporting the commodity after measures ended at the end of May. Thailand, Indonesia and Malaysia had originally agreed to cut exports by a total of 300,000 tonnes from October. That scheme ended in March but Thailand said it would continue the curbs for another two months.

Benchmark Thai RSS3 hit a record high of US$6.40 per kilogramme in February 2012 before weak global demand pushed prices down to less than half that value to 2.75 by mid-year. That prompted the export curbs last October by what were then the top three rubber-producing countries. The curbs allowed Vietnam to overtake Malaysia last year to become the third-biggest exporter. Rubber prices started to rebound in April after the dry season in southern Thailand, the country’s main rubber region, had cut supply substantially.

Bangkok Post