Link Between Oil Prices And Rubber Prices Economics Essay


It goes without stating that in modern-day universe gum elastic has become really popular stuff due to its eco-friendly engineering. The environmental inquiry has become more and more important and it increases the popularity of natural gum elastic en mass. It should be noted that man-made gum elastic, which is made from oil won its popularity much earlier than the natural gum elastic, due to its inexpensive monetary value. It wo n’t be a secret that the oil is used for fabricating the man-made gum elastic: “ man-made gum elastic, a replacing for natural gum elastic, depends on the monetary value of petroleum oil ” ( CommodityOnline, 2010 ) . This research would uncover what relationship exist between gum elastic market and what factors determine the monetary value of the gum elastic and their correlativity with the oil market monetary values. With the aid of different research methodological analysiss it was revealed that the natural gum elastic monetary values have direct dependance on the oil monetary value due the fact that man-made gum elastic is manufactured from the petroleum oil, therefore it could barely avoid the impact on the gum elastic market. This research uses Thailand as the major platform for probe the gum elastic market. It would besides uncover the methods of gum elastic fabrication ( as synthetic, every bit good as the natural ) depicting how the monetary value is formed, which factors determine it and what are the major planetary impact provided on the gum elastic market Thailand

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As it was mentioned before the gum elastic ( particularly natural gum elastic ) is going more and more popular due to increased perturbation about environmental jobs and it is one of the most burning inquiries in the modern-day universe. Factories and works of Thailand presents are involved in production immense sums of gum elastic ( natural ) and working on the suggestion effectual solutions that will help sustainability. But there besides exist man-made gum elastic, which besides impacts the gum elastic market. That is why the hypothesis for this study would be the undermentioned statement.

The concluding gum elastic monetary value is determined non merely by the buying power, but by the trade good monetary value, in peculiar oil

This research would incorporate several parts. Abstract, – briefly depicting the research ; debut, supplying hypothesis ; methodological analysis, uncovering the agency of research procedure ; literature reappraisal, look intoing the beginnings used for the research treatment, demoing the distinctive features of the research procedure ; consequences covering with the findings of this study ; and decision would supply sum-up of the study findings


The subject was chosen because it is one of the most acute economical inquiries in Thailand, Asiatic part and the whole universes, as the formation of the purchase powers involve the different part, but the monetary value on the gum elastic is formed locally in Thailand. Talking about the participants of the research it would be indispensable to observe that there was made no important division on measuring on the fabricating the gum elastic, which are to be implemented on the mills. Hence it should be noted that the economical facets every bit good as inside informations of fabrication, every bit good as vision of modern-day research workers on this instance provided important impact on this research procedure of this probe. Harmonizing to the different research workers rubber, which is manufactured in Thailand is exported all over the universe and is considered to be rather valuable trade good: “ Rubber is one portion of life of the people of the South, related both to the civilization and economic system of the last 108 old ages. The monoculture production system has replaced a traditional system of gum elastic woods, where gum elastic used to be grown in amongst fruit groves and natural woods known as a suan somrom or “ integrated garden ” . Rubber plantations have been promoted through the authorities ‘s Welfare Fund for Rubber Plantations ” ( Sayamol Kaiyoorawong, p. 2 ) .

The qualitative and quantitative methods aboard with the equal reappraisal of the other researches plants became the footing of her probe. It is indispensable that such a subject as rating how the oil monetary value impacts the formation of the no-good monetary value demands assorted issues of informations aggregation that would assist to exemplify the statistical informations from different point of position. Among the suggested 1s there are could be observed:

Using available information. Academic literature equal reappraisal would assist to do a historical observation of the set job. How it was related to by the governmental forces and what were the consequences.

Detecting. Observation of statistical informations on governmental web sites and forums, aboard different statistical informations provided on the condemnable justness archives. Would supply apparent statistics which either prove or disprove the local informations and would assist to supply comparative analysis in different countries.

Every of this methods used for the informations aggregation are really of import for this research, as it would do certain part in the whole research procedure, qualifying local accomplishments and drawbacks on the background of the planetary 1s and supplying comparing of different factors impact on the formation of the monetary value. It would be indispensable to take into history the fact that there would be one individual beginning, which requires critical scrutiny

The suggested research design alongside with the applied methods made the bases of the research, held by the writer. As the nucleus stuffs used different statistical information and probes that day of the month back to the different phases of the inquiry probe. The writer reviewed the job from the different sides and this let the reader to acquire the full information about the ascertained instance. The structural division and assorted thoughts upon the discussed inquiry make this study easy clear and good structured, showing all the necessary information for those who are interested in this inquiry.

Literature Review

Academic literary beginnings such as magazine articles and books benefit a batch to the apprehension of the attacks used to look into the economical state of affairs on Thai gum elastic market, the globalisation impact, local political factors ( in peculiar Thai authorities activity ) , correlativity between gum elastic and oil pricing and facets of gum elastic fabrication procedure. They benefited a batch to the apprehension raised issue in the peculiar country and topographic point, as from the historical position as gum elastic is valuable export trade good in Thailand for more than 100 old ages ( Sayamol Kaiyoorawong, p. 2 ) , every bit good within the modern-day economical state of affairs. It would be of import to observe that there were used beginnings, that day of the month back to the different historical periods and it helped to measure the raised societal issue and detect the difference between the military and civilians in different historical positions. Economic Change in Thailand, 1850-1970 by James C. Ingram provided truly of import enlightening informations covering with the historical development of gum elastic fabrication in Thailand, the formation of the industry and the formation of the monetary value on natural gum elastic. The writer made a important emphasis on the fact that the gum elastic fabrication is strongly of import for the economical development of Thailand: “ An estimation of the Department of Agriculture for 1937 put the country in fruits at 1,900,000 rai, largely in the Central and Southern parts ; and the country in veggies at 105,000 rai, largely in the Central part. The 3rd harvest is rubber. Accurate statistics of land area are hard to obtain, but a recent estimation put the country in gum elastic every bit high as 2,000,000 rai in 1950. More will be said of the gum elastic industry when we discuss other exports. Rubber and rice are the lone agricultural harvests which are of import exports, and gum elastic is a comparative fledgling. ” ( James C. Ingram, 1971, p. 51 ) . It goes without stating that being so valuable trade good for the whole state rubber economical place is rather high, as gum elastic workss provide a figure of workplaces in agricultural part of the state for more than 100 old ages and increasing during the last 20 old ages a batch.

It would be of import to observe that there was used information from non-academic beginnings, which tell more about the province of things in the most recent times, depicting the current state of affairs on the gum elastic market, analyzing the facts that impact formation of the monetary value and discusses economical value of this trade good for the state, part and the whole universe. The magazine and newspaper articles giver relevant informational informations about gum elastic market, rubber production and analyze the factors impacting the monetary value of the trade good globally and locally. Measuring the gum elastic market and the procedure of fabricating the research workers reveal close connexion other trade good has to people, who have already become the participants of the fabrication processes ( as for man-made every bit good as for the natural gum elastic ) . Political Decentralization and the Resurgence of Regional Identities in Thailand by Patrick Jory, published in Australian Journal of Social Issues is one of the best exemplifying illustrations how does the gum elastic fabrication industry and the trade good itself impacted by the local Thai authorities, how the governmental alterations could impact the gum elastic market, finding the monetary value of the trade good. The article tells about engagement of governmental and political establishments in the life of gum elastic industry and how this could impact the industry and the people working at that place: “ One of the marks of the onslaught on the Democrats-led authorities was its support for the indisposed gum elastic industry, a major industry in the Democrats ‘ heartland of southern Thailand. So bit by bit, regionalism is get downing to act upon alliances on the Thai political scene. ” ( Patrick Jory, 1999, p. 337 ) . The curious organisation of gum elastic fabrication attracts a figure of research workers, as in the present twenty-four hours worlds, legion ecological calamities this eco-friendly stuff is winning more popularity. What is more of import about the natural gum elastic fabrication procedure is the fact that it is manufactured in eco-friendly ways. Thus is the sustainable waste recycling the natural gum elastic increase its domination over the man-made parallel and is extremely appreciated by the representatives of constructional industry, who promote sustainable solutions for bioclimatic architecture and it is really non surprising. It should be noted that bioclimatic architecture and eco-design are non merely a modern tendency. Peoples, who work at the mills and utilize the tools that correspond to the norms of sustainable waste recycling thoughts consider that the increased involvement and speedy development of sustainable vision within the different life facets is the sharpening of the environmental inquiry and consciousness and apprehension of the scrutinized state of affairs by the different people. It should be noted that the thought of bioclimatic architecture is besides supported by the authorities forces ( such as European Commission ) , this besides characterize design vision as a quickly developed environmental solution. Thus the buying powers increase

The writers focus on the importance of such collaborative plans between makers and constructional and design industries who deal with the eco-friendly solutions as the ecological state of affairs in present twenty-four hours worlds is truly important job and it is possible to avoid the undermentioned state of affairs described by the organisation World Rainforest Movement, Sayamol Kaiyoorawong: “ The publicity of the enlargement of the rubber country by the Rubber Welfare Fund Office, an increasing monetary value for gum elastic, and the strong planetary market demand for natural gum elastic for industrial processing into a assortment of industrial gum elastic goods has led to the enlargement of the gum elastic plantations country and an invasion into the woods of the South and besides into the woodlots of the North Eastern part which make up a big portion of the natural wood of the East. Rubber is a non-native species which the authorities has promoted, and both the Royal Forest Department and the Forest Industry Organization purpose to bring forth economic income to the organisation from commercial plantations of gum elastic ” ( Sayamol Kaiyoorawong 2008 ) . The society understand the nucleus importance of the importance and potency of gum elastic for development of Thailand, but the same clip local newspapers and magazines consider that gum elastic monetary value could barely be significantly impacted by the local functionaries, authorities etc. The major states, which determine the monetary value on the trade good are those who export it from Thailand – Japan and the United States of America: “ The international market, complete control over the supply of natural gum elastic in Thailand, Malaysia and Indonesia the custodies of a few states. The usage of natural gum elastic large state the United States, Japan, non the production of natural gum elastic, demand depends wholly on imports, its natural gum elastic monetary value support are besides apparent. China is besides the universe ‘s 2nd largest importer of natural gum elastic on international Jiaojia more direct influence ” ( Industry News, 2010 ) . Therefore impacting the gum elastic formation monetary value exterior forces, which do non depend on the local factors, the same clip include oil monetary value in the formation of the monetary value on natural gum elastic, as man-made gum elastic is manufactured from oil and the mean monetary value on both trade goods is formed consequently: “ Similarly, monetary values of rough oil would besides go forth its imprint on gum elastic monetary values. Monetary values of natural gum elastic and petroleum oil have a co-relation as man-made gum elastic, a replacing for natural gum elastic, depends on the monetary value of rough oil. Crude oil monetary values have risen to around $ 90 a barrel, and are expected to stay steadfast as demand expands ” ( CommodityOnline, 2010 )


Manufacturing Procedure

As it was mentioned before natural no-good monetary value increased due its eco friendly fabrication. The major constituents of gum elastic either natural or man-made rubber, filled in with S and other additives to do the gum elastic have certain qualities, which are necessary for farther fabrication. If you make a hole in heve a tree, so latex would be pouring from it and after the latex is dried in the Sun so we get natural rubber or gum elastic. What is interesting about gum elastic that syntactic gum elastic vail to the natural by its qualities but their cost is about the same there be different “ formulas ” of gum elastic and due to its natural qualities and ecology friendly fabricating its farther fabrication procedure trades with different environment friendly solutions. HARBEC Plastics, Inc in their Every Day Is Earth Day at HARBEC ( 2009 ) claims that they have found effectual engineering that could help in development of sustainable design solutions and benefit to the waste recycling: “ Environmentally responsible makers find ways to cut down their impact on the environment. Often a individual solution will hold a positive consequence on several facets. The end is to pull off fabrication procedures to conserve resources and prevent pollution ” ( HARBEC Plastics, Inc. , 2009 ) . Injection casting is a type of fabrication procedure used for bring forthing parts from both: every bit thermoplastic every bit good as thermosetting plastic stuffs. They are poured into a het barrel, assorted, and forced into a cast pit where they cool and hardens to the constellation of the mold pit. After a merchandise is designed, normally by an industrial interior decorator or an applied scientist, the casts are made by a moldmaker ( or toolmaker ) from metal, normally either steel or aluminium. And eventually by precision-machine method the characteristics of the coveted portion are formed. Injection casting is widely used for fabrication of different things: from the smallest constituent to full organic structure panels of autos, for illustration. Bulge casting is a fabrication procedure used to do pipes, hosieries, imbibing straws, drape paths, rods, and fibres. The machine is used to squeeze out stuffs and this method is really similar to injection modeling machine. A motor turns a prison guard, which pours granules of plastic through a warmer. The granules melt into a liquid, which is forced through a dice, organizing a long ‘tube like ‘ form. The form of the dice determines the form of the tubing. The bulges are so cooled and organize a solid form. The tubing may be printed upon and cut at equal intervals if necessary. The pieces may be rolled for storage or packed together. Shapes produced from bulge could be T-sections, U-sections, square subdivisions, I-sections, L-sections and round subdivisions. One of the most celebrated merchandises of bulge casting is the fiber ocular. Therefore there is a immense row of sustainable stuffs, which are reclaimable, and could profit to the development of the sustainable design, for illustration – natural gum elastic. “ The production of Sn and gum elastic was undertaken because of the stimulation of a favourable world-market monetary value and to fulfill an external demand. Virtually the full end product of Sn and gum elastic has ever been exported. Domestic ingestion is a negligible portion of the entire merchandise, and the little sum consumed is normally embodied in imported manufactured merchandises instead than processed domestically ” ( James C. Ingram1971, p. 51 ) .

Rubber Price Formation and Its Economical Value

Talking approximately historical position of gum elastic monetary value formation it should be noted that in the nineteenth century gum elastic was non the cardinal exporting trade good in Thailand, but 100 old ages passed and the state of affairs changed: “ Tin and teak have long been of import export trade goods, while gum elastic is a comparative fledgling. Exports in 1850 were rather varied and no individual merchandise accounted for a really big portion of the sum. After 1850, rice and Sn became the first merchandises to rule the export list. Teak became of import in the latter portion of the 19th century, while gum elastic has become a major export merely in recent decennaries ” ( James C. Ingram, 1971, p. 93 ) .

The 20th century technological revolution let the makers to develop man-made gum elastic, which is made from the rough oil: “ Natural Rubber and Synthetic in certain merchandises can replace the usage of each other, so when the supply of natural rubber monetary value tendency tenseness or high tide, Man-made gum elastic ingestion will lift, the market place of both the being complementary. In add-on, as Man-made yes petrochemical merchandises, oil monetary values will impact the monetary value degree. Man-made gum elastic can be transformed into alterations in the monetary value degree affect the demand for natural gum elastic, this is besides non be ignored ” ( Industry News, 2011 ) . As it was mentioned earlier both gum elastics every bit man-made every bit good as natural have about the same monetary value and oil impacts the formation of natural gum elastic monetary value as its man-made parallel and the same clip rival besides impacts the overall gum elastic market. The perceivers note that every twenty-four hours could convey a record on the no-good monetary value: “ Another twenty-four hours, another record monetary value for gum elastic. Two old ages ago south-east Asiatic manufacturers were speaking about mooching up gum elastic trees in an effort to bolster the monetary value of latex. They did n’t make it, and merely every bit good – turning demand and tight supply have driven monetary values up into antecedently chartless district. On Wednesday, Thai rubber ( RSS3 ) was up 5c at $ 4.95/kilo, more than four times its December 2008 monetary value of $ 1.10/kg ” ( Tim Johnston, 2010 ) . The monetary value are turning enormously for the recent old ages and Thialand, which is one the leaders in exporting gum elastic increase the monetary values due to the turning demands in trade good. The major gum elastic consumers ( about 60 % ) need natural late for production of different vehicle tyres. The planetary popularity on the intercrossed autos and the research workers consider that such a flourishing addition is the consequence of planetary involvement towards the planetary trade goods. The same clip some research workers and economical analysts consider that that now formation of the monetary value on gum elastic market seems to lose its traditional connexion to the oil monetary values and now is formed due the connexion to the other merchandises ( Tim Johnston, 2010 ) . The same clip analysts could non avoid ageing that the monetary value still is besides depending by the other traditional force per unit areas. Returning once more to the historical background, it would be of import to observe that gum elastic was exported to Japan and United States since the times of WWII: “ In 1940-41 there was an addition in gum elastic exports through Bangkok to Japan and the United States. Japan entirely took 12 per centum and 50 per centum of Thai rubber exports in 1940 and 1941. Since the war, direct cargos of both Sn and gum elastic to the United States have greatly increased. In 1947 and 1948 about 75 per centum of Sn exports ( metallic content ) went to the United States, but in 1949 and 1950 the sum dropped to 41 per centum and 29 per centum ” ( James C. Ingram1971, p. 97 ) . These exporting traditions could be observed even now. But in the present twenty-four hours worlds, when the huge bulk of fabrication powers are removed from the well developed states to the states of the 3rd universe there was made a important displacement in the market demands. In peculiar the current roar in Chinese automotive market and even sulky recovery in the western states, the concluding consumers are still purchasing the new tyres, which determine the development of the market. The statistical information Tells us that Thailand is universe ‘s largest manufacturer of the gum elastic exporting “ 10m tones a twelvemonth ” ( Tim Johnston, 2010 ) . Among the relevant factors that could impact the development of the industry is the conditions. The first half of 2010 was signified by important dry in Thailand and it negatively reflected on the crop, and in the 2nd portion of the twelvemonth in major productive countries there was observed inundations, which besides could barely avoid the impact. “ Demand is turning faster than supply, ” said Chayo Trangadisaikul, the president of the Federation of Thai Industries Rubber-based Industries Club, but he says there is besides a proficient component. “ Towards the terminal of the twelvemonth, the statistics come out and they show we ‘re non traveling to hold adequate gum elastic, ” he said. ” ( Tim Johnston, 2010 ) . The popularity of the man-made gum elastic is doubtless resulted by these natural catastrophes, and it is a good known fact that monetary value formation of the man-made gum elastic straight depends on the monetary value of oil. The consequences chapter would supply the abandoned infants made during the treatment.

Governmental Impact on Formation the Price

The research workers consider that even now the dependance on the oil monetary value is still present, even the trade good is deriving such a correlativity, going more and more independent. This occurs due the governmental plans, which are aimed on the development of the industry and spread outing fabrication powers. Tai authorities understand how of import export trade good gum elastic is and for the recent old ages the governmental plans and alterations provide merely positive impact on the development of the industry, profiting to the spread outing non merely in Thailand but in the whole part of South East Asia. As it was mentioned earlier spread outing of the fabrication powers does non take down the monetary value as the recent powers are much lower than the clients need, therefore governmental plans benefit non merely to the substructure development, but besides lending a batch to the natural gum elastic popularity and ouster of the man-made parallel. Some green militants consider that Thai authorities harm local environment, but it should be noted that governmental plans support seting of the trees for fabricating intent, once more act uponing on the formation of the gum elastic monetary value


As it was mentioned before the monetary value formation depends on legion factors. The undermentioned graph demonstrates no-good monetary value in Singapore since 1960 to 2005

Rubber monetary value, Singapore RSS 1 watch pocket in bales, 1960 – 2005

And now it is increasing significantly. It goes without stating that such local factors as natural catastrophes, political reforms and alterations of authorities in Thailand could barely avoid impacting the formation of monetary value and the economical value of the natural gum elastic. The major rival – man-made gum elastic, despite the figure of disadvantages is still really popular excessively, as due to the mentioned negative impact ( particularly weather and natural conditions ) the needful natural gum elastic is replaced by the man-made parallel. But there is ascertained common dependance: “ Natural gum elastic is peculiarly exposed to developments in the automotive industry, itself extremely sensitive to economic recoil or recession. Besides, and although proficient demands might restrain the easiness of replacing SR for NR, the portion of NR in gum elastic ingestion is likely to be affected by the monetary value of its man-made gum elastic ( SR ) substitutes, which is in bend strongly influenced by development in oil monetary values. The higher oil monetary values are, the more attractive natural gum elastic is ” ( UNCTAD, 2010 ) . The international analysts consider that such common dependance have developed since the beginning of the twenty-first century and non the least function at that place played non lone addition of oil monetary value but the environmental issues raising and sharpening: “ Therefore, since the early 2000s, it appears that NR monetary values have been deriving extra support from high and lifting oil monetary values, via man-made gum elastic monetary values ( which rose in response to the strength of feedstock monetary values ) . Besides alterations at the cardinal degree, currency motions may play a portion in gum elastic monetary value developments ” ( UNCTAD, 2010 ) .


In the terminal it would be indispensable to return to the really get downing. The hypothesis set was to uncover whether The concluding gum elastic monetary value is determined non merely by the buying power, but by the trade good monetary value, in peculiar oil or non. The different beginnings of the research argued that this connected in the recent times could be referred as dubious. But still the huge bulk of research workers recognize that the oil monetary value impacts the formation of concluding gum elastic monetary value, every bit with natural and governmental factors. International analysts made rather an optimistic forecast for the recent hereafter for the trade good, emphasizing on the fact that the impact of oil monetary value is take downing and perchance could be vanished shortly, replaced by the more indispensable and traditional factors ( local authorities and nature ) every bit good as buying demands of the concluding client


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