STA plans aggressive production expansion To boost global market share of natural rubber Aiming to raise 2022 sales by 20% to 1.6 mln tons
Sri Trang Agro-Industry Pcl. (STA), the world’s leading manufacturer of integrated natural rubber products and Thailand’s largest producer of latex gloves, launches an aggressive expansion plan in response to the rubber industry’s recovery and uptrend, aiming to increase global market share to 12% and Thai market share to 35%. The company plans capacity increase of 1.1 million tons a year by boosting investment in block rubber production during 2022-2023 by between THB 6 and 7 billion.
Mr. Veerasith Sinchareonkul, Chief Executive Officer of Sri Trang Agro-Industry Public Company Limited (STA), says the world is experiencing some megatrends that will positively impact the natural rubber industry. These include the industry’s early recovery pushing up demand while world supply lags behind and the transition in the auto industry from internal combustion vehicles to electric vehicles (EVs). EVs reportedly require larger wheels and tires because of higher weight and torque. This means the auto industry will need more rubber. Meanwhile, TSR20 block rubber traded in the Singapore Exchange has got a fine rate with the average price expected to reach at least 170 cents per kilogram in 2022, up from 167 cents a kilo the previous year. This is a good opportunity for STA to grab a larger share in the global market for natural rubber.
To reinforce its position as the world’s leading natural rubber trader, the company is aiming at increasing its global market share in 2022 to 12% from 10% at the end of 2021 as well as its market share in Thailand to 35% from its end-of-2021 share of 32%.
At the same time, the company has invested more than THB6,600 million to pump up production, expecting to add 1.1 million tons of block rubber a year from 14 production facilities in the North, Northeast and South as well as in Myanmar. In 2021, the plants in Thailand kept their operations running at over 80% of capacity year-round. In 2022 there will be seven new plants to come online, including the ones in Sakon Nakhon, Phitsanulok, Trang, Kalasin, Buriram, Sa Kaew and Bung Kan. The remaining plants will be completed in stages between 2023 and 2024.
The investment expansion plan is meant to cope with an increasing sales target for all categories of natural rubber in 2022 which is expected to reach 1.6 million tons, a 20% increase over the sales volume of 1.3 million tons the previous year. The expected sales growth is in line with the company’s aggressive investment plan during the next three years (2022-2024) to boost production capacities for all types of natural rubber products to 4.16 million tons a year by 2024, jumping more than 40% from the 2021 production of 2.81 million tons.
“We look at the next three years as our opportunity to invest in capacity expansion because the global rubber demand is just beginning to recover and looks set to grow steadily in the long run. This is all happening while the world supply cannot keep up because some major rubber exporters have had issues with expanding capacity. So, this is our opportunity to accelerate investment,” Mr. Veerasith says.