Thai rubber industry wary over European war but expects price to hold up

However, the price would also depend on developments in the Ukraine-Russia conflict, RAOT governor Nakorn Tangavirapat told the Thansettakij news outlet.

Athiwee Daengkanit, RAOT’s research and development director, said the price was being supported by the low quantity of rubber in the market as Thailand enters the dry season. Meanwhile, market demand is high, supported by China’s economic stimulus policy and subsiding Covid-19 infections that allowed more Chinese factories to open.

China is by far the biggest market for Thai rubber exports.

Another positive factor was Chinese car sales, which rose 18.7 per cent to 1.74 million units in February from a year earlier, breaking an eight-month slide.

Chinese sales of neighbourhood electric vehicles (NEV) also surged 197.5 per cent in February, raising demand for rubber even higher.

However, the energy price remains high after the International Energy Agency (IEA) reported that oil supply from Russia will fall by 3 million barrels per day next month.

This would lead to a global shortage of 700,000 barrels per day in the second quarter.

Meanwhile, the baht has strengthened again on dollar sell-offs as the US Federal Reserve is expected to raise the interest rate by 0.25 to 0.50 per cent with another six rises signalled for this year.

Athiwee said the market is closely monitoring the Ukraine-Russia conflict as it will affect rubber demand and prices. She expects the price to remain stable through April on demand from China and Japan, though said the Russia-Ukraine conflict would be a factor.

Worathep Wongsasuttikul. honorary president of Thai Latex Association, forecast that the rubber price would remain strong. He cited the probability of an early dry season due to the La Niña phenomenon. But he also cautioned that the European conflict could drive up the price.

Thailand is the world’s largest exporter of rubber, with an industry that supports around 1.7 million Thai households.