Bright Outlook for Malaysian Rubber Industry
KUALA LUMPUR: Once a major source of income for the country, the production of rubber was reportedly declining and some investors even labeled it as a sunset industry.
However, the recovery in the global economy and the shortage of natural rubber have since enhanced prospects for the industry this year and there are positive signs for the future.
The International Monetary Fund (IMF), in its World Economic Outlook October 2016, said based on the global economic scenario, which was estimated to grow at a faster rate of 3.4% this year, the shortage will be at 350,000 tonnes this year.
“The expected natural rubber (NR) supply deficit is expected to be more severely felt during the period up to May 2017 as seasonal factors will affect the overall supply,” IMF said.
According to The Malaysian Rubber Export Promotion Council, Malaysia is still a favoured rubber exporter as the rubber produced is of high quality, while the prices are competitive in the international market.
In fact, the MREPC is confident that despite stiff competition from Thailand, Indonesia and China, Malaysia is expected to remain a major supplier of rubber gloves.
This is supported by the fact that Malaysian glove manufacturers are advanced in terms of technology as the requirements for medical grade gloves become increasingly stringent.
Another reason the future of rubber industry looks bright is because of the recovery of the automation sector where rubber is one of the major materials needed in automobile manufacturing such as tyres, piping and tubing
According to Malaysia’s Minister of Plantation Industries and Commodities, Datuk Seri Mah Siew Keong, Malaysia also had the ability to produce high-value engineering rubber products used in the field of vibration and earthquake engineering.
“In fact, our manufacturers installed and supplied rubber seismic bearings to high-seismic activity countries like New Zealand, Iran, Indonesia, Turkey and China. Our rubber products are of world standard,” he said.
In a recent report, the Malaysian Rubber Board (MRB) said rubber prices would continue their uptrend this year, driven by the recovery in the crude oil market, supply concerns and renewed expectation of a US-led global economic recovery.
The MRB said the global NR consumption growth this year was expected to increase between 1.9% – 2.3% as demand increased in the region in line with improvements in economic growth.
“According to the World Rubber Industry Outlook published by the International Rubber Study Group in June 2016, the global total NR demand in 2017 was expected at 12.73 million tonnes and production 12.78 million tonnes,” said the MRB.
As for the local market, the MRB said, demand for rubber and rubber products this year was expected to increase marginally with export earnings set to rise to RM33.5 billion from RM31 billion in 2016.
“NR production this year is estimated to increase by five per cent year-on-year to 680,000 tonnes,” it added.
Mah added that rubber downstream products in Malaysia would be part of the 2050 National Transformation efforts towards producing high-technology and high value-added products.