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iconRubber scenario in 2015 [   December  2014 ]



It is expected that rubber scenario in 2015 is still in low gear amid the slowing global economy caused by low global inflation rate and crude oil price, which has declined from 115 $/barrel in June 2014 to 79.6 $/barrel in November 2014, or 30% down, resulting in the decline of energy price, which accounts for 10-15% of inflation rate calculation. With weak demand of other commodities mainly caused by weak demand from China, the largest consumer, global inflation rate was further pressed down by 0.4%. The International Monetary Fund (IMF) expects that US economy would grow at the rate of 3% in 2015 from 1.7% in 2014; the EU will remain stagnant in 2015 at the growth rate of 1.5%; Japan will restrict the economic growth in the range of 0.8-1.1%; China will be affected by structural reform and its property sector would drag down the growth rate to 7.1%; Thailand may recover at 4.1-4.8%. Overall, IMF expects global economic growth of 4% in 2015.

In terms of natural rubber outlook, according to the Economist Intelligence Unit (EIU), global consumption will grow at an annual average rate of 3.6% in 2015-16, from a subdued rate of 2.8% in 2014, thanks to the economic recovery of major consuming countries.  However, the sharp decline in prices of crude oil, from which synthetic rubber is produced, could also emerge as a headwind to stronger NR consumption if the price weakness is sustained. The International Rubber Study Group (IRSG) expects that consumption demand in 2015-16 grows by 3.4%. On the production side, the EIU expects contraction in global production of 6.4% in 2014 and production growth by an average of 4.2% a year in 2015-16, buoyed by recovery prices. IRSG expects that global production in 2014 declines 2% from 2013, especially in Thailand and Indonesia due to dry weather conditions and unremunerative price for rubber tappers. On the supply side, the supply glut is expected to decrease in 2015-16. Global rubber stock in 2015-16 will be around 3.2 and 3.4 million tons respectively. On the price front, we expect natural rubber price to grow considerably in 2015-16 due to low production growth and supply glut will continue easing. The EIU expects that natural rubber price increases by 7% next year.


Whatsoever, the Thai Rubber Association has positive attitude towards rubber market outlook since natural rubber contributes to economic growth. Besides, International Rubber Consortium Ltd. (IRCo) and Thai government are ready to provide the solution to falling rubber prices with various schemes. This mechanism will ensure a better rubber situation.

In conclusion, the Thai Rubber Association 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 2015, 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


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