It is expected that rubber scenario in 2016 is still in low gear amid the slowing global economy as obviously seen in China, Russia, Europe, Japan and emerging markets. Bearish stock markets, slowing trade growth, coupled with declining price of crude oil and other commodities are the negative factors affecting rubber market. US economy has improved but the Eurozone still struggles with inflation ease. The International Monetary Fund (IMF) expected that the world GDP grows by 3.5% this year and 3.7% next year. It expects that Eurozone economy grows by 1.2% this year and 1.4% next year; Chinese economy grows at slower rate of 6.3% next year, affecting its trading partner countries, especially Asian countries; Japanese economy grows by 0.6% this year and 0.8% next year. The Economist Intelligence Unit expects that crude oil prices will not bounce in the next 5 years as modest demand growth will fail to catch up with resilient supply. Global crude oil supply will expand further on the back of continued output growth from OPEC, pressuring other commodity markets.

In terms of natural rubber outlook, according to International Rubber Study Group, rubber supply may grow a further 2.9% in 2016 to 12.97 million tonnnes driven by the maturing of trees that were planted when prices were higher. Rubber demand is expected to rise by 4.3% to 12.83 million tonnes in 2016. The Rubber Economist forecasts that the average annual consumption growth rate for 2015-2017 may only reach 1.9% due to a weaker trend of China’s rubber consumption during 2015-2017. The forecast for the other top 4 consuming countries – USA, Japan and India, are also for slow growth. The decline of the world output early this year is expected to turn to an increase of 3.5% to reach 12.53 million tonnes in 2015. A similar growth rate is expected to continue into 2016 and 2017 to reach 13.5 million tonnes by the end of 2017. Demand is expected to be higher for NR than SR for the next few years. However, global NR stocks may reach 3.70 million tonnes by the end of 2017. The Economist Intelligence Unit expects that global NR stocks may drop by 30.5% and 49.9% in 2016 and 2017 respectively. The persistence of low prices, which are discouraging tapping, and the negative impact on El Nino on Indonesia output bring about much larger deficits, of close to 1 million tonnes in both 2016 and 2017.

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. The promising projects comprise of the following: 1) the establishment of ASEAN Regional Rubber Market which will prevent rubber price risk, contribute to price discovery and drive the supply-demand mechanism in more efficient manner, 2) international cooperation on promotion of domestic consumption of 300,000 tonnes of natural rubber in producing region for the production of rubber dock bumpers and for the construction of road and other infrastructures.

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 2016, 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.