Market and product

SLACK demand in the overseas market has forced rubber producers to focus more on the local market, driving down profits, rubber dealers say.

In September 2009, a pound of RSS5-type rubber, used for making tyres, cost K700 (1 pound equals 0.45 kilograms), but has risen to K1100 this month, said U Aung, owner of Myint Aung rubber company.

“Last year, I exported rubber to China by road, but this year overseas demand decreased significantly because of greater competition from markets abroad, so I turned to the local market.

“But it really hurt my profits because in the domestic market a pound of RSS5 costs K1100, as against K1600 on the international market. A pound of RSS1 rubber costs K1400 at home, and K1700 overseas,” he said. RSS1 rubber is typically used in making shoes.

He said the difficulty for foreign buyers in making payment was the main obstacle to international sales.

“Thailand, Indonesia and Malaysia can produce rubber of the same quality as ours or better, so buyers choose a seller which it’s more convenient to deal with when making payments,” said U Aung.

Most local rubber producers now sell their raw material to local tyre and shoe factories since they don’t have enough international orders to finish their product.

Daw Sein Toe, owner of Sein Kabar rubber company, said: “In 2009, I exported 1000 tonnes of RSS5 rubber to Singapore. But this year it fell to 400 tonnes, so I’m selling raw rubber to local tyre and shoe factories,” she said.

Growers may have problems selling latex in the post-monsoon season while international demand is dropping, said U Aye Maung, a rubber grower in Tanintharyi Region.

“We sell a pound of RSS5 latex to dealers for only K390. Last year, [international] demand was so good there was nothing left to sell [locally]. Demand may have fallen by more than 40 percent this year because rubber dealers didn’t get enough foreign orders and had to turn to the local market, which reduced the amount of latex they bought from us,” he said.

(Source: www.mmtimes.com)