Three natural-rubber producing countries – Malaysia, Indonesia and Thailand – are considering reducing natural rubber exports to stabilise and boost commodity prices, which still continue to fluctuate after signs of recovery.
Excessive speculation resulted in “unfair prices” for both producers and consumers and there’s concern about recent price volatility, the International Rubber Consortium recently said in a statement. The group is the operating arm of the International Tripartite Rubber Council (ITRC), which represents governments and exporters from Thailand, Indonesia and Malaysia.
Together, they account for about 70% of global exports. “Prices are below fundamentals,” Titus Suksaard, governor of the Rubber Authority of Thailand, said at a joint media briefing in Bangkok. Production from top exporters is poised to decline this year, while demand remains strong with increasing car sales in China, Europe and Japan, he said.
They agreed that rubber prices will continue to rise because of several factors, including lower supply due to heavy rainfall and flooding in the South of Thailand. However, the big players in the natural rubber industry see prices as still volatile.
Rubber futures in Tokyo dropped 19% this year and Thai prices fell 5.2% as concerns about a supply shortage due to floods in Thailand eased. The three countries last year agreed to reduce exports by 700,000 tonnes to boost prices.
As a result, the three countries have agreed to increase domestic demand as much as possible. They will meet again in July to discuss the issue again and see whether prices are still fluctuating; if so, the group might consider controlling rubber exports to tamp down prices.
Detailed plans are yet to be discussed and get final approval from ministers of the three countries, said Salmiah Ahmad, the consortium’s chief executive officer.
Malaysia, Indonesia and India implemented policies to reduce rubber plantations in a bid to curb production and boost market prices, said Titus.