The Asian rubber industry: perspectives for consumption, production and prices ASEAN +3 Rubber Conference Phuket, Thailand April 2013 Dr. Hidde Smit

This presentation Five parts: Aggregate rubber consumption Analysis and perspectives for natural rubber production potential Market developments, oil prices and natural and synthetic rubber prices Natural rubber consumption and production Potential scenarios and strategies

Part 1. Aggregate rubber consumption

World rubber consumption, % annual growth IRSGSmitIRSGSmit (4.3) (-0.2) IRSG :World Rubber Industry Outlook, December 2012, in brackets updates as in Rubber Statistical Bulletin Smit: March 2013

Total rubber consumption

Growth of total rubber usage

Part 2. Analysis and perspectives for NR production potential A general framework for natural rubber supply analysis is presented The trend in production will be called normal production Production exceeds normal production at high prices And vice versa

Normal production levels are analysed using the vintage approach The vintage approach derives and includes per country The composition of the total area for natural rubber according to the year of planting (the vintages) The average yield profile for a hectare of rubber during its life Technical progress in quality of clones affecting yield profiles of hectares planted in various years

Natural rubber planting, Thailand source data: country statistics, Association of Natural Rubber Producing Countries, with adjustments and own estimates

Natural rubber area (‘000 ha) and production (‘000 tonnes), Thailand

Natural rubber planting, Indonesia source data: country statistics, Association of Natural Rubber Producing Countries, with adjustments and own estimates

Natural rubber area (‘000 ha) and production (‘000 tonnes), Indonesia

Natural rubber planting, Malaysia source data: country statistics, Association of Natural Rubber Producing Countries, with adjustments and own estimates

Natural rubber area (‘000 ha) and production (‘000 tonnes), Malaysia

Natural rubber planting, India source data: country statistics, Association of Natural Rubber Producing Countries, with adjustments and own estimates

Natural rubber area (‘000 ha) and production (‘000 tonnes), India

Natural rubber planting, Vietnam source data: country statistics, Association of Natural Rubber Producing Countries, with adjustments and own estimates

Natural rubber area (‘000 ha) and production (‘000 tonnes), Vietnam

Natural rubber planting, China source data: country statistics, Association of Natural Rubber Producing Countries, with adjustments and own estimates

Natural rubber area (‘000 ha) and production (‘000 tonnes), China

Natural rubber planting, Cambodia source data: country statistics, Association of Natural Rubber Producing Countries, with adjustments and own estimates

Natural rubber area (‘000 ha) and production (‘000 tonnes), Cambodia

Natural rubber planting, Philippines source data: country statistics, Association of Natural Rubber Producing Countries, with adjustments and own estimates

Natural rubber area (‘000 ha) and production (‘000 tonnes), Philippines

Natural rubber planting, Myanmar source data: country statistics, Association of Natural Rubber Producing Countries, with adjustments and own estimates

Natural rubber area (‘000 ha) and production (‘000 tonnes), Myanmar

Natural rubber production, Laos

Global NR normal production to reach 18.5 million t. by 2025; actual production may be higher or lower depending on prices

Growth in normal production of NR

Part 3. Market developments, oil prices and natural and synthetic rubber prices

Future growth in total rubber consumption (IRSG) and normal production of NR

Developments in NR and SR prices: NR prices based on supply and demand SR prices largely based on costs with a little influence of the market

The price of oil, forecasts based on US-EIA

The price of Butadiene, supply constraints may push the price higher

SBR prices, increasing to $4.00 in 2025; NR prices declining to $2.20 and recovering to $3.75

NR share in consumption, increasing to maximum 47%

Part 4. Natural rubber consumption and production

Natural rubber consumption

World rubber consumption 2025: NR 19.3, SR 22.2, total 41.5

Natural rubber production

Part 5. Potential scenarios and strategies

Buffer stocks The Thailand government bufferstock is estimated at 200,000 tonnes by the end of This scenario assesses the potential effect of an additional purchase of 200,000 tonnes in 2013; the accumulated 400,000 tonnes to be disposed evenly during 2014 and 2015.

NR prices and BS: prices 2012: +0.28, 2013: +0.29, 2014: -0.26, 2015: -0.21, 2016: +0.27

Enhanced replanting program for Thailand

Average age at uprooting, Thailand base down to 29.5 years, scenario 28 years

Replanting, Thailand a total of 80,000 ha more during

Normal production, Thailand

NR prices

Lower normal production for Thailand if planting data from IRSG are used

New planting, Thailand source: Association of Natural Rubber Producing Countries (ANRPC), International Rubber Study Group (IRSG), forecasts by Smit

Rubber area, Thailand source: Association of Natural Rubber Producing Countries (ANRPC), International Rubber Study Group (IRSG), forecasts by Smit

Normal production, Thailand estimates and forecasts by Smit, using ANRPC data and IRSG data respectively

NR prices

Thank you!