Thailand is the only country in south-east Asia that has not been touched by the colonization of the Europeans. Today it leverages a great economic engine carrying with it a strong economy in South East Asia. But Thailand is much more than just pristine beaches for a luxury outing. It boasts an almost right mix of manufacturing, trading, and cultivation. As a result of which it sustains a thriving commodity market.
A commodity market is a physical or virtual marketplace for buying, selling, and trading raw or primary products. There are currently about 50 major commodity markets worldwide that facilitate trade in approximately 100 primary commodities.
Thailand is awash with resources including metals, agricultural produce and etc. Thailand also seeing robust growth over the years thanks to its pro-investment policies, well-developed infrastructure, strong export industries, and a free-enterprise economy.
A highly positive trade balance has led Thailand to become the 20th largest export economy in the world. The country has managed to achieve export sales growth over the last five years at an annualized rate of 1.9%. Thailand’s Top 5 Commodity Exports Commodity are Refined Petroleum, Rubber, Rice, Raw Sugar, and Gold. Thailand’s Other Notable Exports are Computers, Delivery Trucks, Integrated Circuits, Telephones, Jewellery. United States, China, Japan, Hong Kong, and Malaysia are the primary export destinations.
It is among the leading producers of coffee, sugar, lignite, tin, feldspar, gypsum, and cement globally. Other mineral resources include coal, petroleum, and natural gas. Thailand also has abundant reserves of gold, zinc, iron, and copper.
Thailand is the tenth-largest gold-exporting country in the world with a 2.2% share of a global market that is worth more than $324 billion. Thailand has managed to increase the value of its gold exports by 9.4% in the last five years.
Thailand’s Other Notable Exports which need to be mentioned are Computers – $18.3 billion Delivery Trucks – $9.87 billion Integrated Circuits – $9.82 billion Telephones – $6.02 billion Jewelry – $3.87 billion focus on quality and flexible trade policies led to the growth curve of expanding commodity-market.
In 2019 however, the commodity market in Thailand took a new turn, where it swerved from the traditional commodity items to manufacturing. In 2019, machinery had the highest value of exports in Thailand, amounting to approximately $30.73 billion, followed by manufactured goods.
Post-COVID and future trends
The COVID-19 outbreak in January 2020 is much under control through rigorous effort, but the economy is moving towards recession as businesses lose revenue and households lose income from supply chain disruption, particularly in tourism and exports. Things are not as bright as pre CVID days. The government’s relief measures are unlikely to offset the contraction in aggregate demand in 2020. The hard truth is COVID rattles the commodity market globally.
Due to the COVID-19 globally, inspections and the work of surveyors have been affected somewhat but it is still being carried out with physical inspections giving way to doing this remotely. So that should pan out and has panned out quite smoothly. Moreover, the incentive to non-comply is also very low as we have seen that the HSFO-VLSFO spread is quite narrow. So overall and around the globe, compliance has been quite good so far.
The local market of Thailand is also quite advanced and matured in terms of demand and supply. The factories are enabled with both sophisticated technology & superior workforce to produce quality products in a short period of time. This helps in creating demand for newer varieties of products and their availability in a short period of time to meet demand. The commodities market of Thailand are quite influenced by changing the psychological behavior of the locales as well as the international market Thailand and its market is famous for setting new market trends right from the appliance and food industry to the fashion and accessories segment.
India in Strong Trade Competition with Thailand
While Indonesia has typically sourced most of its sugar requirements from Thailand and Australia, moves are currently underway to boost imports from India amid bilateral efforts to export Indonesian palm oil to India. Currently, Indonesian regulations allow the import of raw sugar with a minimum International Commission for Uniform Method of Sugar Analysis. Although the policy change could potentially alter raw sugar trade flows from India to Indonesia, several traders were skeptical that the policy change would happen anytime soon. Market sources noted that there are no trade discussions reported between India and Indonesia now, and that Indonesian buyer will likely continue to be a major buyer of Thai raw sugar in first-half 2020.
Thailand’s Top Import commodities:
Crude Petroleum import costs about $17.2 billion, Gold at $6.34 billion, Petroleum Gas at $5.02 billion, coal briquettes at $1.1 billion, soybeans at $1.01 billion. Thailand’s other notable imports are integrated circuits at $7.57 billion, vehicle parts at $5.23 billion, broadcasting equipment at $3.65 billion, computers at $3.57 billion, office machine parts at $2.67 billion. Thailand’s imports/exports of refined petroleum account for 2.7% of Thailand’s total annual exports and the country has more than 1.5% share of a global market. According to the World Energy Council figures, Thailand achieves oil production of 17.2 million tonnes per year.