STA Introduce ‘Traceable Rubber’ to Meet with EU Regulations and for Higher Selling Prices

Sri Trang Agro-Industry Public Company Limited (SET: STA) expects demand to return in 2024, led by the U.S. and Europe, while introducing a “traceable” rubber that could potentially up its selling price in the global market.

At the press conference on Thursday, Mr. Veerasith Sinchareonkul, Managing Director of STA, expected an improvement in the natural rubber industry in 2024 from higher demand from a recovery in European and U.S. markets as clients have been destocking to the normal level.

Moreover, concerns about lower rainfall from El Niño are subsiding, and the overall outlook will become much better once demand from China returns.

The company plans to ramp up its sales to 1.5 million tonnes this year, up 15% from 1.3 million in 2023, while introducing a traceable rubber to meet the new EU Deforestation Regulation (EUDR), an important turning point in the global fight against deforestation.

This new rule requires related goods shipped to Europe to provide the origin of those products that must be traceable to the plantation that has been confirmed for no deforestation.

EUDR will start to apply on 30 December 2024, and STA is the first company in Thailand to initiate this project to comply with the new rule. With its 30% market share in Thailand, the STA is currently in a leading position than other countries in the region as surveys show that competitors are still way behind STA in applying EUDR.

Mr. Veerasith said in the conference that this traceable rubber could increase the selling price of STA in the Eurozone or other countries that require rubber products with legitimate origin, while normal rubber and global price will be applied to other destinations that do not require these traceable products. The company expected 50% of its sales to be traceable by next year.

More importantly, its rubber glove production unit that runs by Sri Trang Gloves (Thailand) Public Company Limited (SET: STGT) could also benefit from this initiation by STA as any product with rubber as material must be traceable.