Stop-gap measures for rubber exports

Stop-gap measures for rubber exportsACCORDING to reports, the International Rubber Consortium (IRCO) will advise member countries Thailand, Indonesia and Malaysia to slow down their natural rubber exports as well as reduce raw rubber sales until prices are at a reasonable level for both sellers and buyers.

It was reported recently that IRCO’s intention is to maintain natural rubber’s floor price at US$4/kg. IRCO first issued the recommendation in August amid a sell-off in the futures market. This comes on the heels of sharp declines in natural rubber prices due to global economic concerns like the slowing US economy and deepening European debt crisis.

Natural rubber production is expected to increase by 6% this year from the estimated 5.6% at the start of the month, according to the Malaysia-based Association of Natural Rubber Producing Countries (ANRPC). Output from countries representing 92% of global supply will increase to 10 million tonnes from 9.5 million tonnes.

The impact of the rains and flooding in Thailand, the biggest grower of rubber, is not significant as the polymer is mainly grown in the south. The country is expected to produce 3.38 million tonnes this year, compared with 3.25 million tonnes in 2010.

Meanwhile, Indonesia is expected to produce 2.96 million tonnes, compared to 2.74 million tonnes, while in Malaysia, output is estimated at 1.02 million tonnes compared with 939,000 tonnes.
Exports might rise 2.6% this year, less than the 3.1% growth estimated a month ago and much lower than the 10.4% figure last year. While the lower rate mostly reflected weak demand because of the global economic slowdown, floods in Thailand had reportedly disrupted some movements to ports. Demand from China, India and Malaysia, representing 45% of the global total, was likely to grow only 0.7% this year, compared with a 4.7% increase last year. (PRA)