BANGKOK: Traders and industry officials are optimistic that rubber prices will start rising from this year as the global economy recovers and demand is set to exceed supply.
Rubber prices have been struggling since plunging in the first quarter of 2016. Although demand is expected to be flat this year, especially as the car industry continues to struggle, the recent flooding in the South, Thailand’s major rubber growing area, and measures among major rubber producing countries to cut output would help trigger a rising trend in rubber prices. “The outlook for rubber is expected to improve in 2017 amid the gradual global recovery, driven by emerging markets and developing economies,” said Chaiyos Sincharoenkul, president of the Thai Rubber Association (TRA).
The Bank of Thailand has forecast economic growth of 3.2% in 2017, the same rate as in the previous year, noting that downside risks to the economy largely from external factors. The car industry, which consumes about 70% of total rubber production and largely supports rubber-related industries, is forecast to see flat growth in 2017.
The Federation of Thai Industries has forecast car production this year to reach the target of 2 million units. Car exports are also predicted to be flat this year at 1.22 million units, compared with 1.20 million expected to be shipped in 2016. The tempered demand for rubber, however, is expected to be more than offset by the shortage in supply, according to the industry.