Sri Trang to increase NR capacity as prices recover

Songkhla, Thailand – Sri Trang Agro -Industry is planning to increase natural rubber production capacity by 20% to 2.9 million tonnes by the end of the year, as part of its “Sritrang 20” growth strategy.

In its first quarter report on 12 May, the world’s biggest natural rubber producer said it had secured over 8000 hectars of land for rubber plantation and was to increase its production from the current 2.4 million tonnes per annum in the wake of recent natural rubber price recovery.

The company is building a rubber processing factory Sakonnakorn and in Palembang (Indonesia) as well as expanding capacity at existing factories in Thailand as part of the growth strategy.

Sri Trang currently account for 12% of global natural rubber market share and its Sritrang 20 strategy aims to increase the figure to 20% in five years.

According to a Nikkie Asia Review report, Sri Trang will invest 2.5 billion baht to 3 billion baht (€66 million - €79 million) in new production lines, including new manufacturing facilities for sheet, block and liquid rubber in northeastern Thailand.

In its first quarter results, Sri Trang’s total revenue from all products rose 70.8% year-on-year to Baht 28.5 billion, driven by the significant increase in average selling price.

According to the Thai natural rubber producer, prices rose 68.8% year-on-year during the three months to 31 March and 32.5% compared to the final quarter of 2016.

Sales volume was just under 389 kilotonnes increased by 6.9%  year-on-year, due mainly to an increase in domestic sales underpinned by the strong demand in tire industry in Thailand.

Gross profit margin increased from 4.9% to 6.7%, while operating margin improved from -1.2% in Q1 2016 to 1.2%.