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iconRubber scenario in 2017 [   December  2016 ]

 

The rubber scenario is expected to improve in 2017 amid the strengthening global recovery, driven primarily by emerging market and developing economies. Better commodity price and the movement of crude oil price also give positive support to rubber price. According to the International Monetary Fund (IMF), the projected increase in global growth in 2017 to 3.4 percent hinges crucially on rising growth in emerging market and developing economies. In 2017, USA’s growth is expected to pick up to 2.2 percent, as the drag from lower energy prices and past appreciation of the U.S. dollar fades. Japan’s growth is projected to remain weak, in line with potential, at 0.5 percent in 2016, before rising to 0.6 percent in 2017. Postponement of the consumption tax hike, the recently announced growth enhancing measures will support private consumption in the near term. India’s GDP will continue to expand at the fastest pace among major economies, with growth forecast at 7.6 percent in 2016–17. In China, the economy is expected to grow by 6.6 percent in 2016 on the back of policy support, slowing to 6.2 percent in 2017 absent further stimulus. Growth for the Eurozone as a whole is projected to decline slightly to 1.7 percent in 2016 and 1.5 percent in 2017 as weaker investor confidence on account of uncertainty following the Brexit vote will weigh on activity. Oil prices are expected to increase gradually over the forecast horizon, from an average of $43 a barrel in 2016 to $51 a barrel in 2017. OPEC has agreed to cut 1.2 million barrels of its daily oil output, reducing its target production to 32.5 million barrels a day starting in January 2017.

In terms of natural rubber outlook, when analyzing rubber price, it is necessary to take into consideration factors on production, consumption demand and surplus. The Rubber Economist anticipated that there will be a sharper pickup in NR production during the next two years to bring the output to 13.30 million tonnes by 2018, leaving the annual growth rate for 2016-2018 at 2.7%. The average consumption growth rate for 2016-2018 has remained around 3% and brings rubber (NR & SR) consumption to 29.16 million tonnes by 2018, despite an improvement in the consumption growth rate expected in 2017 and 2018 over 2016. According to the Economist Intelligence Unit, NR production should expand in 2017, by 2.5%, in tandem with higher prices and more favourable weather conditions. Growth in output is expected to slow slightly to an annual average of 2.3% in 2018. Global consumption growth is forecast to grow steadily at an average annual rate of around 2% in 2017-18 as demand increases across all regions in line with slightly stronger economic growth in 2017, especially in emerging countries.

The Thai Rubber Association has positive attitude towards rubber market outlook since natural rubber contributes to economic growth. Besides, The International Tripartite Rubber Council (ITRC) and Thai government have been providing solutions to falling rubber prices with various schemes. This mechanism will ensure a better rubber situation. The promising projects of ITRC comprise the following: Agreed Export Tonnage Scheme during September – December 2016, cooperation on utilization of rubber in road building and Rubber Innovation and Products Award, aiming at encouraging usage of rubber. Among Thai government’s campaigns are production control measure, encouragement for cutting old and unproductive rubber trees and replacement of rubber with other plants of economic importance based on climate and soil conditions. The government aims to replant well-bred rubber trees at the rate of 300,000 rai per year and and other plants at 100,000 rai per year in line with Rubber Authority of Thailand Act B.E. 2558. The plantation area control will balance rubber quantity and bring about stable and satisfactory rubber price.

In conclusion, the Thai Rubber Association strongly believes in the long-lasting relationship and corporation with the concerned sectors i.e. government agencies, private sector, rubber growers as well as the three largest NR producers, namely Thailand, Indonesia and Malaysia, to provide strategic direction and solution to falling prices in short term and long term and ultimately to stabilize the rubber prices.

On the occasion of the New Year 2017, I extend to you and your family our warmest greetings, wishing you a happy New Year, your career greater success, your family happiness and your perfect health and lasting prosperity.


Signature
Mr. Chaiyos Sincharoenkul
PRESIDENT

 

 
 
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