Rubber Prices Set to Increase Next Year

Natural rubber prices will continue to rise next year even though output from the world’s leading producing countries is expected to increase, according to an expert from the London-based International Rubber Study Group (IRSG).

In the domestic market, the price of natural rubber at the central market in Hat Yai rose from 45 baht per kilogram at the beginning of the year to a record high of more than 70 baht in July. It has since declined and now is trading at about 59-60 baht, the Bangkok Post reported in an article on the Asean Rubber Conference 2005. Prachaya Jumpasut, head of economics and statistics at IRSG, and keynote speaker at the event in Bangkok, declined to give a specific price forecast for natural rubber, but said it likely would trade above 50 baht per kilogram next year.

The IRSG has forecast that natural rubber production in 2006 will increase by 3.3 per cent from 8.89 million tonnes in 2005 to 9.19 million tonnes.

Thailand, the world’s largest producer, is projected to produce 3.11 million tonnes next year, up 4.2 per cent year-on-year, while output from the other two leaders – Indonesia and Malaysia – is forecast to increase 1.7 per cent and 5.2 per cent, respectively, to 2.28 million and 1.23 million tonnes.

The rise in rubber prices this year has prompted the three countries to boost their output. Even Malaysia, which had been cutting output in recent years, is reviewing its production plans for 2006.

This year, Thailand is expected to produce 2.99 million tonnes of rubber, up by only 1 per cent from the year before, while production in Malaysia is expected to increase just 0.7 per cent year-on-year.
Dr Prachaya said the IRSG had slightly revised downward its projected increase in rubber output from Thailand’s, partly because of the unrest in the South.

In terms of consumption, the organisation has forecast that demand will continue to rise until 2009. Total world rubber consumption, including natural and synthetic products, is expected to increase from 20.03 million tonnes in 2004 to 23.84 million tonnes in the next four years, or an annual growth rate of 3.5, per cent.