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iconRubber Scenario in 2020 [   December  2019 ]


In 2020, the global economy tends to grow more positively as compared to 2019. International Monetary Fund (IMF) has projected the global economic growth rate as 3.4% in 2020. Meanwhile, Thai Government has rolled out the economic stimulus measures to establish economic strengths both in domestic and foreign countries. One of the most important measures is the investment in the Eastern Economic Corridor (EEC), which needs clarity as well as a continuation to generate more trade and investment opportunities. Furthermore, the prolonged US-China trade war is still the risk factor that must be focused as it can affect Thailand’s export to the US and China. However, entrepreneurs need to follow the news as well as quickly adapt to different and unexpected situations.
Natural rubber outlook 2020 is forecast to slow down in line with global economic growth as the economic factors above coupled with the natural rubber output and demand for natural rubber factors. For example, the fungal disease problem, spreading through many rubber plantations, especially Indonesia rubber plantations affected as 380,800 hectares. Meanwhile, Thailand and Malaysia were also affected as 52,000 and 5,000 hectares, respectively. For severely affected rubber plantations, the yield decreases as 70-90%. Meanwhile, the yield decreases as 30-50% for middle affected plantations. The International Tripartite Rubber Council (ITRC) expects that in 2020, rubber yield will decrease more than 800,000 tonnes. According to the Economist Intelligence Unit (EIU), growth in global natural rubber production is projected to slow to an annual average of 1% year on year in 2020-2021 as high stocks and weak prices discourage supply. Similarly, growth in global consumption of natural rubber is forecast to slow to an annual average of just 2.6% in 2020-2021, down from an estimated growth of 4.5% in 2018 because of the declining automobile demand and the volatile crude oil prices.
The Thai Rubber Association has a positive attitude towards the rubber market outlook since natural rubber contributes to economic growth. Besides, the International Tripartite Rubber Council (ITRC) and Thai government have strong collaborations that aim to establish sustainable natural rubber. To reach the goal, rubber prices should encourage smallholdings as well as build confidence for the rubber users. The measures of ITRC comprise the following: 1) Supply Management Scheme (SMS); 2) Agreed Export Tonnage Scheme (AETS); 3) Demand Promotion Scheme (DPSC). Furthermore, Thai government has the promotion of cultivating other economic crops in rubber plantations and the promotion of domestic natural rubber consumption. In addition, Thai government also promotes and supports research coupled with rubber-based product development to add product values.
In conclusion, the Thai Rubber Association strongly believes in the long-lasting relationship and corporation with the stakeholders, i.e. government agencies, private sector, smallholdings as well as the three largest NR producers: Thailand, Indonesia, Malaysia, and other rubber producing countries in the ASEAN to provide strategic direction and measures to falling prices in short term and long term and ultimately to stabilize the rubber prices.
On the occasion of the New Year 2020, 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.

Mr.Chaiyos Sincharoenkul
The Thai Rubber Association

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