Rubber exporters may boost output, exports

Rubber exporters may boost output, exports

Nitsara Srihanam, Dow Jones, Bangkok

Rising global rubber prices may trigger an increase in rubber production and exports by the world's leading rubber producers, according to a report issued on Friday by the Thai Farmers Research Center.

The world's top three rubber producing countries - Thailand, Indonesia and Malaysia - are expected to step up their output and exports in line with expanding global demand, despite the three countries having earlier agreed to cut rubber output and exports by 4 and 10 percent, respectively, since last year, the report said.

"It is expected that the (involved) countries will renegotiate on the output and exports cut plan. (Thai Farmers Research Center) expects that these producers will increase both output and exports in accordance with growing global demand...to take advantage of rising rubber prices," the report said.

Thailand, Indonesia and Malaysia agreed in 2001 to cooperate in limiting rubber output and supply in an attempt to lift rubber prices off 30-year lows. The plan was implemented in 2002.

Thailand, the world's largest rubber producer and exporter, produces around 2 million to 2.4 million tons of rubber a year, around 90 percent of which is exported. Output from Indonesia and Malaysia, the world's second largest and third largest producers, totals around 1.4 million to 1.5 million tons and 600,000 tons, respectively.

Other smaller rubber producers will also be attracted to expand their rubber production, the report said.

Economic and industrial growth in rubber consuming countries, China in particular, is the main reason for the robust increase in prices, the report said. Also, rubber stocks have fallen in both consuming and producing countries and adverse weather as a result of the El Nino phenomenon caused lower supply in many places, the report said.

Thai unsmoked sheet rubber, a raw material, was traded at its highest level in nine years Friday at 41.38 baht a kilogram (0.97 U.S. cents) at the Central Rubber Market in Hat Yai, southern Thailand. USS3 was traded below THB30/kg in the last couple of years, until December, when the price rose to around THB31- THB32/kg.

Unsmoked sheet rubber is smoked prior to export.

Thai ribbed smoked sheet rubber for export was bid Thursday at $1.04/kg and offered at $1.06-$1.07/kg, compared with quotes of below 50 U.S. cents/kg in 2001.

The research center forecast world rubber consumption will grow 7 percent in 2003, from 17.63 million tons in 2002. In 2004, rubber consumption is expected to grow 5.5 percent, the report said.

The research center also forecast China will import around 900,000 of natural rubber in 2003, compared with around 400,000 tons in 2002. Thailand is expected to export around 400,000 tons of rubber to China this year, compared with around 280,000- 300,000 tons in previous years, the report said.