1. Thailand, Indonesia, and Malaysia are the top three producers representing 75% of the global rubber output.
2. With approximately 3.3 million hectares rubber plantation area across the country and about 1.6 million households rubber agriculturists. Thailand’s rubber industry has a full range of supply chain from upstream to downstream. The upstream is mainly involved with the planting and harvesting of rubber.
3. Following by the midstream that involves the processing of rubber into semi-finished products for downstream industry such as ribbed smoked sheets (RSS), technically specified rubber (TSR), concentrated latex and compound rubber and skim rubber.
4. Lastly, the downstream industry includes the production of rubber products such as vehicle tires, gloves, condoms, elastics and shoes.
THAILAND'S RUBBER AND TIRE INDUSTRY
1. Thailand is ranked as the world’s number one producer and exporter of natural rubber. However, the industry is facing with significant shrink in its overall export value and volume.
2. The consumption of rubber fluctuates and depended on several factors. Firstly, demand for primary products especially automobile. 70% of Thailand’s rubber will be processed into vehicle tires.
3. Secondly, many companies in China, America, Europe and Japan tend to use Synthetic rubber instead of natural rubber as it is lower cost. Moreover, Thai natural rubber industry is facing with increasing competitors especially from CLMV (Cambodia, Laos, Myanmar and Vietnam) nations as rubber has low level of product differentiation.
4. According to Ministry of Commerce, the overall export value of Thailand’s natural rubber in 2018 was USD 4.6 billion which shrink 23.6% from the previous year.
5. The export value for first half of the year 2019 has declined. Thai natural rubber’s export value was USD 2.9 billion with 7.63% reduced compared YoY.
6. In term of the export volume, total export volume of natural rubber increased from approximately 4 million tons in 2017 to 5 million tons in 2018, according to Rubber Int. Unit.
7. China remains to be Thailand’s major export country for natural rubber with the value of USD 1.9 billion in 2018 reducing 32.66% from previous year which was USD 2.19 billion.
8. Following by Malaysia, Japan, United States, India and South Korea with export value of 658.3, 346, 298, 172.3 and 15.7 million dollars respectively.
9. In 2018, Block Rubber was Thailand’s largest export for natural rubber with about USD 2.2 billion and decreased 22.84% from the previous year.
10. Followed by concentrated latex and Rubber Sheet as the second and the third largest export value at USD 1.3 billion and USD 902 million reduced 11.28% and 37.29% respectively from the previous year.
UPTREND FORECAST
1. Although Thailand natural rubber is shrinking in its overall export value, Thai rubber products noted to have a positive growth with rubber processing products are ranked the fourth largest export value of Thailand.
2. At the end of 2018, the total value of rubber processing products increased 7.48% from the previous year to USD 11.02 billion.
3. Almost half of the overall value came from the export of vehicle tires which valued atUSD 5.1 billion or an 11.45% increase from the previous year.
4. In 2018, Thailand’s export volume of vehicle tires increased from 192 million tires in the year 2017 to 212 million tires in 2018.
CHALLENGES
1. The increase in natural rubber cultivation around the world led to an oversupply of the market and the demand for natural rubber has fall since 2012.
2. The production of rubber gloves and vehicle tires that were normally used natural rubber as main ingredients has shifted towards synthetic rubber.
3. This caused the significant fall in rubber price from THB190 per kilogram in 2014 to THB50 per kilogram in 2017 and reached to THB 44.69 per kilogram in August, 2019.
CHINA-US TRADE WAR IMPACT
1. On January 2019, the US raised the tariff on China’s rubber goods for 25%. In exchange, China has imposed the tariffs on US goods imported to China and lowered the Chinese exchange rate (Yuan) in order to offset the US tariff impact.
2. The prolonged trade war would significantly impact Thailand’s rubber industry because China is the major export market and more than half of Thailand’s rubber sheet are exported to China in order to produce rubber products.
3. The consumption and production of automobiles impacts to the consumption of rubber and tires. In 2018, China reduced 6.25% of the import of natural rubber from Thailand from 1.7 million kilograms in 2017 to 1.6 million kilograms in 2018.
4. However, the impacts of US and China trade war might lead to many American and Chinese rubber companies to relocate their manufacturing bases to other low-cost manufacturing countries in order to avoid tariffs.
5. Thailand is considered as one of the major countries Chinese rubber companies might move to as the readiness of country rich in natural resources important for producing rubber processing products.
THAILAND'S INVESTMENT PLAN
1. There are several investments and government plan to develop the Thai rubber industries including boosting domestic consumption, rubber city, aircraft tire manufacturers, and the tire testing centers.
2. To overcome low rubber prices, Thai government plans to boost domestic consumption of natural rubber as well as reduce the country’s rubber cultivation for at least 30% which will balance demand and supply within the country.
3. Thai government has promoted the use of rubber in road constructions across the country, expecting to increase the domestic usage of rubber. The plan is to use rubber latex in making para rubber soil cement roads for about 300,000 kilometers across the country. The local authority will build this type of road construction for about 50,000 kilometers each year. The year 2018 to 2019, the projects are now available for 2,565 projects and used concentrated latex for 29,554 tons and natural latex 3.07 million tons which significantly increased domestic consumption.
4. The Rubber City project is approximately 1,218 rai with all logistic types from inlands to waterways and airways will attract domestic and foreign investments in Songkhla province driven by the Industrial Estate Authority of Thailand.
AIRCRAFT TIRE PRODUCTION
1. Bridgestone, Japanese tire company plans to invest approximately USD 150 million or THB 6.1 billion on constructing 2 new manufacturing-based plants for aircraft tires and coated fabric in Thailand.
2.The first project will be located in Rayong province with about THB 4.6 billion investment, this project focuses on producing aircraft tire and coated fabric.
3. The manufacturer will be equipped with new technology that helps developing rubber tire structure to have better safety and reduce the use of fuel that suitable for large aircraft.
4. The second project is located in Chonburi with the amount of investment of about THB 1.4 billion. The manufacturer in Chonburi emphasizes on using new production technology to retread aircraft tires
5. Bridgestone already has 4 manufacturers in Thailand located in Nong Khae, Rangsit, Chonburi and Amata City industrial estate. The 4 plants focus on producing passenger, light truck, radial truck and earthmover tires; about 5,000 Thai workers are employed and more than 392,000 tires are produced per week.
6. For the aircraft tire investment, Thailand will become the Bridgestone’s first country for the aircraft tire production outside Japan. According to BOI, Bridgestone is expected to produce approximately 109,000 aircraft tires a year.
AUTOMATIC AND TIRE TESTING CENTRE
1. Thailand has developed an Automatic and Tire Testing Center: Research and Innovation Center (ATTRIC), with the investment of THB 3.7 million on 1,235 rai of land in Sanam Chai Khet district, Chachoengsao province as part of Eastern Economic Corridor (EEC) development.
2. The project is separated into 2 phases. The first phase of the project involves tire testing under world’s standard (UN R117) and will be available in the end of 2019.
3. The second phase will be developed for vehicles and auto parts testing including the test of long distance and high speed, brake performance, park brake, dynamic platform and skid-pad; the second phase expects to be ready in the year 2022.
(Source: businesseventsthailand)
