BANGKOK (Sept 19): The Thai government has approved 30 billion baht ($931 million) in soft loans for cooperatives and companies to use to buy rubber from farmers as a way of propping up prices, Deputy Prime Minister Pridiyathorn Devakula said on Friday.
“We expect this measure would help absorb rising supply from the market and boost prices eventually,” Pridiyathorn told reporters.
He said the first tranche of 15 billion baht would be for local cooperatives to buy latex and unsmoked rubber sheet from farmers and process it into export-grade rubber sheet and blocked rubber.
The other 15 billion baht was for companies that use rubber as a major raw material, mostly glove and condom makers, to help them take up more rubber from farmers.
Thailand is the world’s biggest producer and exporter of rubber. It produced 4.2 million tonnes in 2013, of which around 86 percent was exported.
But demand is slack at the moment because of a slowing Chinese economy and lacklustre growth in the developed world.
Tokyo rubber futures, which set the global price trend, have fallen more than 30 percent this year and have been trading at around five-year lows.
That has helped drag physical rubber prices down by 28 percent this year, with the benchmark Thai smoked rubber sheet (RSS3) offered at $1.75 per kg, down from $2.45 in January.
It touched a record high of $6.40 per kg in 2011 when demand from China was strong.