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By Supunnabul Suwannakij
April 10 – Thailand, the biggest supplier of rubber, plans to increase domestic demand for the commodity used in tires and gloves, said the deputy farm minister.
We want to see local prices at higher levels, Yuttapong Charasathien said today in an interview at the Asean Plus 2013 Rubber Conference in Phuket. Thailand aims to boost local demand and encourage new processing plants, tires and glove manufacturing. The country decided this month to extend limits on exports through May to boost prices after the cuts agreed with Indonesia and Malaysia expired in March.
Rubber fell into a bear market this month on signs that production will outpace demand. The global surplus may widen this year as consumption expands less than expected because of Europe’s debt crisis and a lack of demand in China, the largest consumer, according to RCMA Commodities Asia Group. Falling prices may cut costs for Bridgestone Corp. and Michelin & Cie., the biggest tiremakers, and curb revenue at Sri Trang Agro- Industry Pcl, Thailand’s biggest publicly traded exporter.
Futures rallied 15 percent in 2012 after Thailand, Indonesia and Malaysia, which represent about 70 percent of global output, agreed to restrict exports from October to March and cut down trees, removing a total of 450,000 tons from the market. Rubber for September traded at 278.5 yen a kilogram ($2,800 a metric ton) on the Tokyo Commodity Exchange today.
Futures on April 1 closed 20 percent lower than the February closing settlement, the common definition of a bear market.
Export Curbs
Thailand plans to discuss measures to support world prices with Indonesia and Malaysia, including extending the export reductions for a further year, Yuttapong said last month.
Southeast Asian nations will have to coordinate efforts to develop the industry, Yuttapong told participants at the conference today. The nations need to work together, and map out a plan with key importers in the region, including China, Japan and India, he said.
The three top producers should focus more on managing supplies from plantations to supportprices, rather than export cuts, Daud Husni Bastari, chairman of Rubber Association of Indonesia said March 19. Curbing exports is only a temporary measure and shock therapy for market, he said.
The surplus will widen 62 percent to 353,000 tons this year from 218,000 tons estimated in February, RCMA Commodities said in an April 1 e-mail. Stockpiles may jump 24 percent to a record 1.83 million tons this year, it said. The previous all-time high was 1.73 million tons at the end of 2009, the Singapore-based trading company said.
Inventories in Qingdao, China’s main import hub, reached a record 358,300 tons by March 15, Cai Zhiwei, general manager at the Qingdao International Rubber Exchange Market, said March 22.
The country accounts for 34 percent of global demand, according to the International Rubber Study Group.
Thai rubber free-on-board touched 81.75 baht ($2.82) a kilogram on April 5, the lowest level since November 2009, according to Rubber Research Institute of Thailand data compiled by Bloomberg.
Source: Bloomberg
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