TIRE AND RUBBER INDUSTRY OF THAILAND

Blog Article

Asia is considered as the world’s crucial sources of rubber especially Southeast Asian countries that have hot weather and monsoon climate which are significantly conducive to rubber industry. Thailand, Indonesia, and Malaysia are the top three producers representing 75% of the global rubber output. Since the early 20th century, after rubber plantation was introduced to Trang province, the southern part of Thailand, it has grown to become one of the country’s important cash crops. With approximately 3.3 million hectares are rubber plantation area across the country and about 1.6 million households are rubber agriculturists, Thailand has become the world’s largest exporter and producer of high-quality rubber and rubber processing products such as tires, rubber gloves and condoms.

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. Following by the midstream that involves the processing of rubber including the conversion of rubber into semi-finished products which will become the main for downstream industry such as ribbed smoked sheets (RSS), technically specified rubber (TSR), concentrated latex and compound rubber and skim rubber. Lastly, the downstream industry includes the production of rubber products such as vehicle tires, gloves, condoms, elastics and shoes.

THE SITUATION OF THE GLOBAL RUBBER INDUSTRY - GLOBAL RUBBER AND TIRE MARKET

According to rubber statistical bulletin, the total natural rubber production increased for 2.43% from 13.54 million tons in 2017 to 13.87 billion tons in 2018. Asia pacific is the most important region for natural rubber production, accounted for about 90% market share of the global rubber market. In 2018, Asia pacific produced about 12.64 million tons of natural rubber. Thailand is considered as the world’s largest producer with 33.4% of the global natural rubber market share. Followed by Indonesia, Vietnam, china and Malaysia that were accounted for 24.7%, 8.5%, 6.4%, and 3.8% respectively of the global market share, according to Krungsri research. The second largest natural rubber producer is Europe, middle east and Africa (EMEA), this group produced about 0.9 million tons in 2018 increased from 0.86 million tons from previous year. The third largest producers of natural rubber are Americas with the rubber production volume of 0.33 million tons in 2018 increased from 2017 which was 0.32 million tons.

In term of rubber consumption, the global consumption of natural rubber in 2018 was about 13.7 million tons which illustrated the oversupply as the consumption was less than the production, according to Rubber Statistical Bulletin. Same as production of natural rubber, Asia-Pacific is also the world’s major consumption for natural rubber and China is ranked as the world’s largest consumer. China consumed approximately 9.432 million tons in 2017, which was higher than the previous year for about 3%, according to Global Rubber Markets. This is because, the production in the automotive industry of China has been developing and growing steadily which enhance the consumption of natural rubber. Followed by the United States, India, Japan and Thailand with the consumption of natural rubber of 2.8, 1.6, 1.5 and 1.2 million tons respectively.

Between 2017 to 2027, The consumption of passenger cars and commercial vehicles are forecasted to rise a compound annual growth rate (CAGR) of 6.8% and 6.1% respectively. The growth in automobiles consumption will also lead to the increase in rubber tire consumption and production. The world’s automotive industry and the demand for passenger cars have been increasing steadily which impacts to the demand for rubber tires. The world’s rubber tire market is expected to grow 6.3% CAGR from the year 2017 to 2027 and expected to value approximately USD 645 billion at the end of 2027. Asia Pacific will remain to be the world’s major production and consumption of rubber tire. As economic growth in the region such as China, Japan and Indian have raised people’s demand for automobiles which boost the market growth for rubber tire.

THE PERFORMANCE OF THAILAND’S RUBBER AND TIRE INDUSTRY

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. The consumption of rubber was normally fluctuated and depended on several factors. Firstly, demand for primary products especially automobile that primarily uses rubber as one of the important automotive parts. As about 70% of Thailand’s rubber will be processed into vehicle tires. If the demand for automobiles increased, the demand for rubber tile would increase too. 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.

According to Ministry of Commerce, the overall export value of Thailand’s natural rubber in 2018 was USD 4.6 billion which was shrink from the previous year by 23.6%. The first half of the year 2019, the export value was also looking gloom. Thai natural rubber’s export value was USD 2.9 billion which was about 7.63% reduced comparing to the same period in the year before. 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. China remains to be Thailand’s major export country for natural rubber with the value of USD 1.9 billion in 2018 reducing from previous year for 32.66% which was USD 2.19 billion. Following by Malaysia, Japan, United States, India and South Korea that had the export value of 658.3, 346, 298, 172.3 and 15.7 million dollars respectively.

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