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RUBBER NEWS INT'L: Malaysia - Rubber still performing amid lower prices
(Last Updated: 30 Aug 2018)

 

 

 

Rubber still performing amid lower prices

Malaysia’s natural rubber (NR) production in 2017 reached 740,140 tonnes, an increase of 10% year-on- year, despite the downtrend in prices particularly from June 2017 onwards.

Primary Industries Minister Teresa Kok Suh Sim said the rubber industry in Malaysia has transformed and shifted its focus to downstream activities, particularly on manufacturing high-end innovative products.

“The rubber industry contributed RM32.3 billion in export earnings in 2017, an increase of RM7.5 billion from the previous year.  was attributed to a firm demand for  globally,” she told reporters at the National Rubber  Conference (NREC) 2018 in  yesterday.

NR and other rubber accounted for RM10.5 billion of total exports, while rubber products contributed RM21.8 billion.

Kok added that the success of the industry is a result of extensive research and development (R&D) activities, which in turn has increased productivity, as well as resulted in new technologies that improve processes.

“It has provided vast opportunities, especially in the manufacturing of high-value added automotive and engineering components, as well as created additional employment to over 75,000 people in 2017,” she said.

Kok said the recent trip with Prime Minister () Tun Dr Mahathir Mohamad proved to be very successful as a memorandum of understanding (MoU) was inked between the Malaysian  (MRB) and Hainan State Farms Investment Holdings Group Co Ltd, to collaborate and adopt rubberised bitumen road technology.

“They were very impressed with our technology, our scientist was invited to do R&D on rubber tapping and autonomous.

“What we have can be commercialised. It is a good path into the Chinese market. They do not have much rubber trees as well,” she said.

However, Kok said she is disappointed with some government agencies that do not really value the rubber innovations or products from local R&D, and not interested in pushing the goods into other intra projects.

She urged the agencies to come up with a directive, especially in procurement processes.

“Please use Malaysian-made products. It does not make sense that we are able to export rubber products like gloves to so many other countries, but our own people do not use them.

“We must use our own resource-based products. We can’t push it out or sell it as a commodity anymore, we have to turn it into value-added products.

“When we start using our own-made products, this will not only increase domestic consumption, but also uplift the income of smallholders and the industry as a whole,” Kok said.

Almost 93% of the NR production is contributed by half a million rubber smallholders, who play a crucial role in continuing the supply of NR for the industry.

MRB DG Datuk Dr Zairossani Mohd Nor said the government will remain committed in encouraging smallholders to continue tapping during periods of low rubber prices through the  Incentive (IPG) programme.

“To ensure supply and sustain minimum income , the government through MRB will continue the incentives through the IPG. If the rubber price falls, the government will top it up, so they will receive a minimum income,” he said.

He added that the subsidies will depend largely on the price of rubber and is not only for NR, but also for the production of latex.

“There are two types of raw material: The solid rubber material and latex. For rubber, it’s usually about 30 sen or 40 sen per kilo and that depends on the price of rubber, but for latex, it is fixed at 90 sen per kilo.

“That’s why we are currently encouraging more smallholders to produce more latex. Currently, it can only accommodate about 10% of the latex industry requirement for now,” Zairossani said.

Meanwhile, the NREC 2018 themed “Disruptive Trends: Innovate and Evolve”, is envisioned to be a platform for participants to discuss ideas and share knowledge on topics related to the emerging trends in the rubber industry.

Myanmar: Rubber exports rise, but production yield still not optimal

 Myanmar is expected to export over 150,000 tonnes of  this fiscal year on the back of rising international demand and higher domestic production levels, U Khaing Myint, secretary of Myanmar  Planters and Producers’ Association, told The Myanmar Times.

Around 140,000 tonnes of rubber was exported in the previous fiscal year.

Currently, there are more than 750,000 acres of rubber plantations in the country  are grown mainly in Mon State, Tanintharyi Region, Karen State, Yangon and Bago, according to the Myanmar Rubber Planters and Producers’ Association (MRPPA).

Myanmar produces RSS3, RSS1- rubber and mostly exports RSS3. Around 70 percent of locally produced rubber is exported to China while the remaining is exported to , Malaysia, Indonesia, Korea,  and Japan, according to the MRPPA.

 

In this fiscal year, one pound of RSS3 rubber was exported for K850. Prices have now fallen to  to K780 a pound, said U Khaing Myint. The price of rubber is expected to rise further, buoyed by world rubber prices and the rising value of the dollar.

Rubber is included as a priority product under the National Export Strategy. Despite rising export volumes though, U Khaing Myint said current  levels are less than optimal.

This is because yields are low relative to acreage and compared to neighbouring countries.

According to U Khaing Myint, the average rubber yield per acre per year in Myanmar is around 700 pounds compared to an average of 1000 pounds – 1600 pounds in and up to 1800 pounds in India.

“As such, the rubber production levels of Myanmar is only half that of other rubber producing countries. This is because Myanmar is using the wrong type of seeds,” he said.

“In Myanmar, rubber cultivators are using rubber seeds which can produce a minimum of 500 pound to a maximum of 1000 pounds per acre per year, so the average yield is just 700 pounds. Growers should plant the seeds that yield more rubber to raise production,” he said.

That’s easier said than done though. “Small-scale planters can’t afford to change seeds and so  isn’t possible at all for them to cut down their current trees and grow new ones,” U Khaing Myint said.

For these growers to change to high-yield rubber seeds, capital injection from investors will be needed.

Shortages, price increases likely after EU tariffs on Chinese truck, bus tires

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 COLOGNE, Germany—Europe's truck and bus tire market is likely to see shortages and face increased prices into early next year as a direct result of the European Union's recent imposition of provisional tariffs on Chinese tires.

"With the anti-dumping tariff situation that we have right now, a lot of the orders in the last quarter have stopped," Stephan Helm, chairman of German tire retail trades association the BRV, said at the Future Tire Conference, held May 30-31 in Cologne.

Helm, who also is managing director of the Reifen Helm Group, expects the shortages to show up in third and fourth quarters this year. He also believes the shortages would impact both the budget and premium brands.

Low-cost Chinese tire imports have had the greatest impacted the retreading industry, which Helm said has seen an almost one-on-one relationship between increases in Chinese tire imports and decreases in the retreading market for EU suppliers.

"We are expecting (an impact) mainly on the retreading sector, and we expect increases in prices," Helm said. "If you take it all over Europe, it was 4 to 4.5 million imports from China and (there is) about 1 million stocked at the wholesales. So, this year, we are around 3 million units missing, and I don't think we can compensate for that. We will get some shortage to the end of the year, maybe the start of 2019.

"Then we will see changes as molds are brought from China to other locations and a change in the production situation. Then, I would say, stabilization."

Rubber industry eyes sustainability

Update: June, 15/2018 - 09:00
 
Rubber latex being processed for automobile tyre production at the MTV Rubber JSC in the central province of Quảng Nam. — VNA/VNS Photo Đỗ Trưởng
Viet Nam News

HCM CITY — The Vietnamese rubber industry is targeting sustainable development in addition to trademarks development and higher-quality products, speakers said at a seminar held on June 14 in HCM City.

Trần Thị Thuý Hoa, head of the rubber industry development board under the Việt Nam Rubber Association, noted that the industry and the association were working on sustainable development solutions.

Rubber companies today are expected to not only make profits but also contribute to society and maintain sustainable growth, she said.

International certificates on sustainable growth are available from the Sustainable Natural Rubber Initiative (SNR-I) and World Business Council for Sustainable Development (WBCSD).

Around 45 companies worldwide are part of the SNR-I. They include 31 manufacturers and exporters, and 14 rubber consumers and processors.

As of January this year, 11 companies had joined WBCSD.

“Big companies and processors have committed to sustainable growth. They buy rubber from providers that have a sustainable development plan, so domestic companies should follow this trend,” Hoa said.

Bridgestone, for example, has elevated standards in its sustainable procurement practices by launching a new policy for supplier and partners, she noted.

Bridgestone notes on its website that “Minimum requirements strengthen existing guidance for respect of human rights, environmental standards and product quality, while including additional requirements for land conservation and rights, point of origin traceability and resilience.”

Hoa said that companies like Olam and Sri Trang Group also include information about sustainable development on their websites.

In Việt Nam, the Việt Nam Rubber Group is the first rubber company to commit to sustainable development, according to Hoa.

The rubber association will continue to develop a trademark for Vietnamese rubber and implement sustainable development programmes, she said.

It is also working with organisations to improve members’ awareness about sustainable development, and will offer support to members to join sustainable development projects.

Việt Nam is one of the biggest rubber exporters in the world, with products exported to 128 nations and territories.

In May, the country exported 93,000 tonnes of rubber, worth US$133 million. For the first five months of this year, the total export yield was 424,000 tonnes, valued at $620 million, up by 17 per cent in volume.

China, India and Malaysia are the three biggest importers of Việt Nam’s rubber.

A report from the Việt Nam Rubber Association said that by the end of 2017, the country had 971,600ha of rubber trees, with a yield of over 1.08 million tonnes, accounting for 8.3 per cent of the total world yield. — VNS


Read more at http://vietnamnews.vn/economy/449926/rubber-industry-eyes-sustainability.html#IVBdJPcD0Oy1BM61.99

 

 

 

 

Global demand to continue driving earnings for rubber products

 

 

 

 

 

KUCHING: The resilience of global demand is expected to continue driving earnings for the rubber glove sector as it continues to be plagued with higher natural rubber prices.

While current raw material prices like natural rubber is expected to continue trading at higher levels for the remainder of 2018, analyst MIDF Amanah Investment Bank Bhd (MIDF Research) believes that the sector’s earnings will continued to be driven by resilient global demands for rubber gloves in 2H18.

According to the research arm, the Malaysian Rubber Glove Manufacturers Association (MARGMA) has project that the export for rubber gloves will increase by +10 per cent to RM18 billion from RM16.2 billion in 2017, which is in line with the estimate increase in global demand of 8 to 10 per cent per annum.

“In terms of number of pieces, MARGMA projected Malaysia will export 232 billion pieces in 2018 versus 228 billion pieces in 2017, and 287b pieces per annum by 2020,” said the research arm.

The earnings form the increased exports will also be supported by forecasts of a stable US dollar (US dollar) as the exports are USD-denominated.

However, MIDF Research guides that the current stable US dollar is more beneficial in the longer term than near term as it provides better visibility in terms of revenue and costs while also assisting in currency hedging for manufacturers and reduce potential foreign exchange losses.

And softening the effects of higher raw material prices further is the potential increase in average selling prices (ASPs).

Based on analysis by MIDF Research, it was suggested that the blended average selling prices (ASPs) for gloves have increased less than 23 per cent, meaning that there could potentially be further price increase in 2Q18.

“Therefore, we believe that the gloves producers could potentially record better earnings in the quarters to come due to adjustments in pricing and new capacity expected to come on board in 2H18,” said the research arm.

The raw material prices are expected to continue trading high between the ranges of RM4.50 to RM5 per kg for the remainder of 2018 due to the Tripartite Agreement between Malaysia, Thailand and Indonesia, which aims to ensure the price of natural rubber does not fall below RM4 per kg.

Besides that, the high price of natural rubber will also be supported to remain at current levels due slower growth in China’s automotive industry arising from its recent move to restore its passenger car purchase tax to 10 per cent from 7.5 per cent in 2017 and 5 per cent in 2016.

“That said, we also understand that despite ending the tax incentive policy for compact cars with an engine displacement of 1.6litres and below, starting in January 2018 the government of China has introduced purchase tax exemption for New Energy Vehicles (NEV) for the period of three years which could gradually alleviate the price of natural rubber from 2019 onwards,” added the research arm.

As for nitrile butadiene (NBR) price, the research arm opines that the price would be trending upwards as the demand for nitrile gloves increases worldwide.

Due to this, they estimate that the price of NBR could increase by a further 5 to 10 per cent from its current price to an average of USD1,000 to 1,100 per tonne for the rest of the year.

For 1QFY18, most rubber glove manufacturers found themselves within expectations but with subdued earnings due to a +23 per cent hike in natural gas tariff in January.

Looking forward, the sector will be facing some uncertainty in terms of labour as the new government’s election manifesto has highlighted their intent to increase minimum wages to RM1,500 while reducing foreign labour force by two million in stages.

According to the research arm’s estimates, a RM500 increase in minimum wages will reduce earnings of glove producers by RM1.5 to RM3 million, however this is expected to be passed off to their customers and will be reduced as companies start investing more on automation going forward to reduce their dependency on labour.

Currently, labour costs make up about 12 to 14 per cent of total gloves production costs and 70 to 80 per cent of the sector’s total workforce are foreign labourers.

Moreover, the sector’s near-term prospects are also expected to remain subdued as some rubber glove producers have constraints in terms of capacity from the delay in their capacity expansion from incomplete parts of their production lines.

Cambodia: Rubber exports grow slightly as prices fall

Exports of rubber rose moderately during the first three months of the year, as the market for the commodity continues to be hampered by unstable prices.

 

 During the first quarter of 2018, rubber exports grew by just 880 tonnes, reaching a total of 25,416 tonnes. During that same period, the price of the commodity decreased.

 

“Due to the current situation, the price of rubber in the international market is not stable, and farmers and rubber producers are taking a hit,” said Pol Sopha, director-general of the general directorate of rubber.

Lim Heng, vice-president of An Mady Group, expressed similar concerns.

“With the cost of production being very high in Cambodia, a low price is bad news for farmers and producers, who won’t be able to make a profit,” he said.

In Thailand and Vietnam, the price of the commodity is not affecting the industry as badly because the costs of production is much lower, Mr Heng said, explaining that in these countries the government grants tax cuts to farmers and producers of the commodity.

In 2017, Cambodia exported more than 190,000 tonnes of rubber latex, an increase of 30 percent year-on-year. Vietnam, China, Singapore and Malaysia were the biggest buyers.

Cambodia is the sixteenth largest rubber latex producer in the world.

 

Global rubber consumption has grown steadily

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