Thailand sets synthetic rubber trend
Thailand sets synthetic rubber trend
PHUKET, Thailand (Reuter): The world's top natural rubber producer Thailand is setting a new trend in economically booming Southeast Asia by embarking on plans to make synthetic rubber, industry experts said.
Thailand has already approved a joint venture between two companies from Japan, one Taiwanese and a Thai firm to produce a type of synthetic rubber called Poly Butadiene Rubber (PBR) for use in rubber product-related industries.
Another company, grouping four Japanese firms and Thai partners, also expects to start production in 1998.
The Thai move heralds the advent of synthetic rubber production in rapidly industrializing Southeast Asia where, ironically, most of the world's natural rubber is grown, said the experts attending an International Rubber Forum here.
The two-day forum, which began on Thursday, is organized by the London-based International Rubber Study Group and attended by more 130 delegates from over 20 countries and private firms.
The Thai venture called Thai Synthetic Rubber Co Ltd is between Japan's Marubeni Corp, Ube Industries, Taiwan Synthetic Rubber Corp and Thai Petrochemical Industry Plc.
"It will initially start producing in August with a production capacity of 50,000 tons of PBR a year," general manager of Tokyo- based Marubeni Corp's rubber department, Akiya Maeda, told Reuters.
Japan Synthetic Rubber Co Ltd announced in February it was forming a venture with Nippon Zeon Co Ltd, Mitsui & Co Ltd and Itochu Corp, and its Thai partner Bangkok Synthetics Co Ltd, to produce 60,000 tons of styrene-butadiene rubber and 40,000 tons of PBR per year.
Thailand is becoming an Asian hub for automobile and tire production in which synthetic and natural rubbers are used.
Maeda and some other experts said higher costs of production in developed countries and the growing industrialization of some emerging Southeast Asian economies, like Malaysia and Indonesia, would eventually lead to more synthetic rubber facilities being located in the region in the future.
Malaysia, another big natural rubber producer, was considering synthetic production, some delegates said.
L. Wayne Feller, a specialist in synthetic rubber and executive vice president of Texas-based Chemical Market Associates Inc, said it would be logical for some Southeast Asian countries facing labor shortages to switch to producing synthetic rubber and let those with ample workforce to grow natural rubber.
"As it costs more to produce synthetic rubber in the West, people will start relocating to Asia where there's a growing user market and its cheaper," said P.O. Thomas, a rubber economist.
Synthetic rubber is made from oil and chemicals. It is widely used in many rubber products, sometimes in combination with natural rubber as in car tire-making.
Synthetic rubber prices are volatile and move with world crude oil price movements.
Data on synthetic use in Asia was not immediately available. Thailand is believed by the experts to be the first Southeast Asian natural rubber producer set to make synthetic rubber. Other Asians already making it are notably India and China.
Block rubber
In a related development, Thailand has been urged to increase production of technically specified rubber (TSR) or block rubber which has become more popular among consumers now.
Sanit Samosorn told an International Rubber Forum here that Thailand, which now produces mostly ribbed smoked sheet (RSS) rubber, should diversify to profit from strong demand for the TSR grade or block rubber.
He said neighboring producers Malaysia and Indonesia were increasing their production and exports of TSR and reducing RSS grade exports.
"Thailand is on the contrary increasing (RSS exports)," he said. Thailand, the world's top producer, had only a small share of total TSR production by the three main Southeast Asian producers and its share of total exports was only 6-12 percent.
"Taking into account the expected increase in consumption of TSR in the near future, Thailand would lose the economic opportunity to neighboring producing countries, while the excess supplies of RSS would suffer to lower prices," he added.
Thailand exports about 70 percent of all RSS grade sold by the three main producers.
Processing TSR rubber from latex should not be a problem for Thai factories as they had adequate capacities to meet increasing demand, Sanit said.
He also noted that Thailand's northeastern region had about 2.5 million hectares of land suitable for new rubber cultivation. Land and labor was cheap in the region.
"The extension of rubber production in the northeast is possible as more land and labor are available," he said. "We can thus assure natural rubber consumers of continued and adequate supplies in the future."
Thailand planned to set up three more rubber auction centers in addition to the central rubber market in southern Songkhla to service rubber smallholders. More smokehouses to smoke rubber would also be built, he added.