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Industry Overview: Thailand Rubber Industry

In the last few years, Thailand natural rubber industry has undergone very rapid and fundamental changes with the appearance of many new players, in particular the growth of some traditional suppliers and the emergence  of new ones. Thailand has been the world's largest natural rubber producer and exporter since 2001. According to ANRPC, Thailand produced 34.82% of global natural rubber followed by Indonesia (28.88%), Malaysia (9.71%), India (8.67%) and Vietnam (7.91%). The country turns out more than 3 million metric tons of natural rubber annually. 

According to recent estimates by Goldman Sachs, the rubber output in Thailand is expected to rise by 8 % to 3.7 million tonnes by the end of 2012. The overall export value in 2011 was 678.9 Billion baht (US$ 21.7 Billion) while 14% of rubber output was domestically consumed. The largest export destination was China (1.27 million tonnes, accounting for 43%), followed by Malaysia (344,589 tonnes, accounting 12%), Japan (333,669 tonnes or 11%) and USA (205,410 tonnes or 7%).
 
Being a prime location, Thailand offers rubber investors an ample water supply, a low incidence of power outages, and a reliable transportation infrastructure for smooth operations. Thai rubber businesses are flourishing because of solid government policies promoting the industry which includes the lower tariffs resulting from the country's free trade agreements with trading partners such as China, Australia, New Zealand, and other ASEAN states. Also, the Government of Thailand has increased the financial incentive for growers to chop down rubber trees older than 30 years and replace them with new ones to increase productivity. The Office of the Rubber Replanting Aid Fund, Thailand, has set aside 5 billion baht for this purpose and aims to increase Thailand's natural rubber supply by an additional 250,000 metric tons per year from 2017.
 
Since there is a lot of opportunity in this industry, many firms are increasing their capacity to cater to the increasing demand in future. Thailand's largest rubber processing and exporting company, Sri Trang Agro-Industry, is hoping to become a market leader in the global market by 2014 and is kicking off this plan by setting aside 2 billion baht to build three new plants over 2013-2014. Some of the other top rubber exporting companies in Thailand are Von Bundit, Sri Trang Agro- Industry, Thai Hua, Thaitech Rubber, Southland, Bridgestone Natural Rubber, B.Right, Teck Bee Hang, Tavorn, Hadsyn, Siam Indo, A One, Numhua, and Thai Rubber Latex.
 
The astonishing growth of the rubber industry has helped in the development of many rubber products industry. Goodyear (Thailand) Public Co., Ltd. has invested US$ 25 million in a project to raise the plant's daily production capacity for airplane tyres from 130 to 160 units and for automobile tyres from 4,900 to 7,200 units. Thai Bridgestone Co., Ltd. has also unveiled plans for a US$25 million retread plant.  Many Indian Tyre manufacturers such as JK tyres and Apollo tyres are also looking to invest in Thailand and are scouting for assets in the country.
 
Thailand is not just the largest exporter of rubber but it is also the biggest condom manufacturer  in the world. Looking at the future prospects in this industry Thai Nippon Rubber Co. is spending 600 million baht to build a large production facility in Chonburi Province. Even the medical glove manufacturing industry has benefitted a lot from rubber production. The Sri Trang Group, will be doubling its annual capacity within five years to 20 billion gloves and 160,000 metric tons of other products such as block rubber and technically specified rubber.
 
The Thai rubber industry is clearly on a growth path. The prospects of the industry remain positive as natural rubber is an indispensable resource. Rubber is required in the manufacturing of many industrial and consumer products, from hoses and  vehicle tires to  belts, condoms and gloves. The steady increase in demand for automobiles and medical services due to increase in income levels and economic growth will also help push the demand for rubber in the near future. 
 
(Source: Insight Alpha)
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Goodyear (Thailand) Public Co., Ltd.