Rubber prices to increase as Covid-19 drives up demand

Rubber prices are set to increase as the demand for natural rubber surges. Rubber glove and medical glove producers are the main buyers of the rubber, as the outbreak of coronavirus is ramping up demand for the gloves. There are, however, not enough raw materials for production. 

Drought and the autumn season are hampering natural rubber production, said Tharn Nam Thip Group, a rubber farmer group and major exporter in Betong, Yala Province. The group’s manager, Gumpanart Wongchuwan, said they now have orders up until September, even before entering the next harvesting season in May.

“The demand for raw rubber for processing is rapidly increasing. Some rubber processing plants that previously closed down are now bouncing back, despite it not being the traditional harvest time,” he said.

“There are still some rubber trees left for farmers to work on here but there is also drought in many areas, which means that the amount of natural rubber that we are getting from the trees has lessened,” he added.

Gumpanart explained that they normally produce 20,000-30,000 kilograms of natural rubber per day but that number is now down to 2,000-3,000 kilograms per day. 

Another rubber farmer group in Phatthalung (เครือข่ายสถาบันชาวสวนยางจังหวัดพัทลุง) said the amount of raw rubber in the country has dropped by 40 per cent as farmers in the north, the northeast, and the south have already ended their current harvesting season.

Harvesting is still going on in Phatthalung, but autumn has already affected more than 800,000-900,000 rai of rubber trees, resulting in 50 per cent less natural rubber to be collected from the province. 

The Network of Rubber Farmers Institute of Thailand (เครือข่ายสถาบันเกษตรกรการยางแห่งประเทศไทย) said the impact of the outbreak, which has led to the shutdown of production in China has little effect on the rubber industry and the market is improving where field latex and cup lump is looking better than ribbed smoked sheet. 

This is due to the fact that field latex and cup lump can be processed into more products than ribbed smoked sheet. In addition, Michelin has also come up with new innovations to use natural rubber to produce tyres. 

The high demand for rubber gloves and medical gloves coupled with the drought and autumn should be able to boost rubber prices in the third and fourth quarters, the institute added.

Thailand produced 4.84 million tonnes of rubber from 20.46 million rai of land in 2019. The country exports more than 80 per cent of its overall production. For 2020, the country is expecting to produce 4.91 million tonnes of rubber from 20.58 million rai of land. 

The Kingdom is the world’s largest rubber producer — one third of the world’s rubber comes from Thailand. The demand for rubber had been previously hit by the trade war between the US and China, which led to a slump of more than 20 per cent in prices, down to 38.05 baht per kilogram for local rubber and 35.3 baht for local latex prices. These numbers were five times higher in 2011. 

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