Bright outlook for natural rubber prices

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Demand for medical gloves driving surge

Bright outlook for natural rubber pricesGlobal demand for rubber gloves continues to surge during the pandemic.

The prospects for natural rubber prices are rising, boosted by a sharp uptick in demand for protective rubber gloves because of the pandemic and limited in the world .

Luckchai Kittipol, honorary of the Thai Rubber Association, said he is more upbeat about the rubber outlook after the prices of smoked rubber sheet grade 3 reached 60 baht per kilogramme for the first time on Sept 1 in more than a decade.

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Prices rose from 58.25 baht per kg on Aug 31 and 40.99 baht early in the year.

In the past, ’s rubber production focused largely on rubber sheet, which is used as a raw material to make automotive tyres.

A recent surge in demand for protective rubber gloves, propelled by the Covid-19 pandemic, has driven rubber producers to shift their to latex, which is used to make rubber gloves.

This year Thailand’s latex production is expected to represent up to 30% of the overall rubber production compared with 20% last year, according to Mr Luckchai.

Thailand is the world’s largest producer of natural rubber, making 4.8 million tonnes last year, with exports accounting for almost 4 million tonnes.

Thailand ranks fourth for exports of rubber products and processed rubber, trailing China, Germany and the US. Exports totalled US$11.2 billion last year, up 2%.

Key markets include the US, China, Japan, Asean and Australia, with automotive tyres accounting for 51% of the shipments, followed by and rubber gloves at 19% and 11%, respectively.

The Commerce Ministry reported global demand for protective gloves is soaring in light of the coronavirus pandemic, driving Thailand’s rubber glove exports to surge 38.5% year-on-year in the first seven months of 2020 to $959 million.

Key markets include the US, China, Japan and Britain.

In 2019, Thailand produced more than 20 billion rubber gloves, with exports making up 89% of total production.

Last year Thailand fetched $1.2 billion from rubber glove exports. The country was the third largest rubber glove exporter, trailing Malaysia and China.

According to Mr Luckchai, Thailand’s natural rubber production is estimated to remain at 4.5 million tonnes this year, with exports accounting for 3.8-3.9 million tonnes.

Lower production is attributed largely to higher rainfall and a lack of labourers, most of whom are from Myanmar and Cambodia.

The slump for natural rubber is another reason for the production dip, as it discouraged farmers to grow and tap trees.

Thai natural rubber prices have been falling since 2017, largely because of from major rubber producing countries.

The weak subsequently cut demand from the auto industry, damaging rubber producers.

The drop was also attributed to the growth of rubber plantations in Cambodia, Laos, Myanmar and Vietnam (CLMV) in the past decade. CLMV now supplies 5.3% of the to the global rubber market.

China, the world’s biggest rubber consumer, has also increased its rubber imports from CLMV to feed its domestic demand.

The Association of Natural Rubber Producing Countries (ANRPC) predicted recently global production of natural rubber is likely to fall by 4.7% this year to 13.1 million tonnes as the pandemic has depressed demand and put the industry in crisis.

At the beginning of the year, the association forecast 3.8% and 2.7% rises in production and consumption, respectively. Now it sees demand falling by 6% to 12.9 million tonnes.

Natural rubber imports by China could fall by 5.1% from a year ago to 4.8 million tonnes, according to ANRPC, while demand from India — the No.2 consumer and a major producer of rubber — is set to plunge by 21.3% in part because of the lockdown of its car industry during the pandemic.

Mr Luckchai said domestic rubber consumption is expected to increase to 900,000 tonnes, up from 800,000 tonnes last year now that the Transport Ministry has decided to use natural rubber to produce barriers on roads nationwide.

He suggested the government promote the use of natural rubber in the country to sustain domestic prices and reduce over-reliance on exports, which comprise up to 80% now.

“Many investors in China, Germany and Japan are interested in investing in Thailand, such as in the rubber gloves and tyre industries, but Covid-19 is a key stumbling block for their investment right now,” Mr Luckchai said.

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