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.