THE world’s top three natural-rubber (NR) producers, Thailand, Indonesia and Malaysia are encouraging potential consultancy firms to undertake study for establishing a regional rubber market to enable forming benchmark prices and likewise provide price transparency, amongst other grounds.
According to the International Tripartite Rubber Council (ITRC), the study will be coordinated by the International Rubber Consortium Ltd. (IRCo), and will cover the market’s feasibility and appropriate model or alternative mechanisms as well as recommend milestones, structure and financial implication for implementation.
Companies who wish to support the plan is invited to submit a detailed work plan and study cost to the IRCo by middle of August.
The three NR producing countries account for nearly 65% of the global NR output. Despite of this clout, the council has not established a futures market that can provide basic price discovery and hedging functions, and thereby has to rely on third party exchanges.
With a price discovery mechanism in place, the NR producers , processors, tyre and rubber product makers , and investors to utilise the regional rubber market for risk management, said ITRC, which has been studying this plan since 2010 through its Expert Group on the Regional Rubber Market.
The Regional Rubber Market can also stimulate marker activities and prevent market volatility, it added.