Friday 22 June 2018

Rubber producers to discuss price support

Bangkok, November 14, 2011

The world's top three rubber-producing countries, Thailand, Indonesia and Malaysia, will meet in Bangkok at the end of this week to discuss measures to stabilise weakening rubber prices.

Benchmark Thai smoked rubber sheet (RSS3) has fallen by nearly half from a record high of $6.40 per kg in February. It ended at $3.30 per kg on Friday, tracking Tokyo futures prices, and was offered at $3.40 per kg on Monday.

'There's a two-day meeting on November 18-19, when we will discuss measures to support prices,' Yium Tavarolit, chief secretary of the International Rubber Consortium (IRCo), told Reuters on Monday.     

The IRCo brings together rubber industry officials, exporters and government officials from the three Southeast Asian countries.

In December 2008, when physical rubber fell to a near seven-year low of $1.10 per kg as global recession loomed, Thailand, Indonesia and Malaysia agreed to cut exports by a total of 915,000 tonnes in 2009 to prop up prices.

The market started to rebound from mid-2009, but that was largely due to rising demand from tyre companies in China and India. The export restriction plan was never strictly enforced.

Traders were sceptical about the effectiveness of such measures, saying some previous schemes such as cutting down and replanting rubber trees, which take about seven years to mature, may not support prices much. 

'They'd be better off implementing strong intervention policies such as asking the government to buy rubber directly and keep it in stocks. That could be more effective,' said a trader in Hat Yai, the centre of Thailand's rubber sector.

Traders said they did not expect any surprise from the meeting, saying it could come up with previously tried measures such as export curbs or supply cuts.    

'This time they need to say clearly how much exports they want to cut or how much rubber supply they want to cut, otherwise it won't work,' Pongsak Kerdvongbundit, president of the Thai Rubber Association, told Reuters.     

Another Bangkok-based trader said prices could pick up once measures were announced, but they were unlikely to rise sharply as concern about demand would persist as long as Europe's debt crisis rumbled on.

'The measures could help support prices, but not that much. Prices are now consolidating at an appropriate level, but that won't be as high as $6 or $5 or $4 per kg,' said a Malaysian trader. - Reuters

Tags: Thailand | malaysia | Rubber | price support |

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