Top three rubber producers aim to set up regional market

BANGKOK: The world's top three rubber producers -- Thailand,
Indonesia and Malaysia -- aim to launch a regional rubber market to set
realistic prices and cushion farmers from volatility in futures prices, a
senior official said on Thursday.
"After a ministerial meeting
in Bali, we agreed to set up a regional centre of rubber, or a regional
market that would help reflect realistic prices from producers," Yium
Tavarolit, chief secretary of the International Rubber Consortium
(IRCo), told Reuters, referring to an annual meeting in Bali early this
week.
The IRCo brings together rubber industry officials, exporters and government officials from the three Southeast Asian countries.
"The
idea is still in a stage of feasibility study and the market could be a
physical market, a futures market or a hybrid one," he added.
The
top three producers discussed volatile rubber prices at the ministerial
level meeting of the International Tripartite Rubber Council (ITRC) in
Bali, but the council did not take further steps to stabilise prices,
saying industry fundamentals remained strong, with no stocks overhang in
the market.
"The ministers noted the recent downtrend of natural
rubber prices. The decline was due to the weak sentiment brought by the
euro zone debt crisis and global economic slowdown," the ITRC said in a
statement.
Benchmark Thai smoked rubber sheet (RSS3), offered at
$3.35 per kg on Thursday, has almost halved from a record high of $6.40
per kg in February.
The top three rubber producers, who account
for around 70 percent of global rubber output, normally use supply cuts
and export curbs to help support prices, although some traders are
skeptical about the effectiveness of the measures.
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. - Reuters