The world's top three rubber-producing countries, Thailand, Indonesia and Malaysia, will hold a ministerial meeting next week to seek ways to stabilise prices, a senior industry official said on Thursday.
Cash rubber prices are moving back towards a 56-year high above $3 a kg struck in mid-2008 on an oil-driven rally in Tokyo futures and tight supplies in main producers, after falling by two-thirds in the second half of 2008.
The ministers would review existing measures and adopt additional policies in a bid to prevent prices from becoming too volatile, said Yium Tavarolit, chief secretary and economist of the Bangkok-based International Rubber Consortium Limited (IRCo).
"The meeting will be held on Jan. 17-19 in Kuala Lumpur," Yium said, without going into detail on what would be discussed.
Prices have been volatile over the past two years and although Thailand, the biggest producer, is happy with current levels, it may want to see support plans discussed in case of any future slump.
Cash prices fell as low as $1.10 per kg in December 2008, forcing the three Asian countries -- which produce 70 percent of the world's rubber -- to agree measures to cut exports by 915,000 tonnes in 2009 to shore up the market.
However, prices recovered during the year, even before that plan really took effect, and rose further from November when unseasonable rains cut supply at a time when demand was rising.
Thai ribbed smoked sheet (RSS3) was at $3.12 per kg on Thursday, the highest since September 2008. Earlier that year prices hit a 56-year high of around $3.25 per kg.
PRICES TO RISE
Next week's meeting will bring together the IRCo, which groups government and industry officials from Thailand, Indonesia and Malaysia, plus private rubber operators and the International Tripartite Corporation (ITRC), which groups senior agricultural officials and ministers from the three Southeast Asian countries.
Traders and industry officials doubted the outcome would have much impact on prices in the near term, expecting them to rise further as demand still outpaced supply.
In addition, any effort at cooperation to temper price rises, which could damage demand in the long term, could be hampered by the absence of stockpiles to help manage prices, they said.
"It can be discussed. But we don't have stocks. We are now in a short position due to bad weather. Every day now you see rain," said Asril Sutan Amir, chairman of the Rubber Association of Indonesia.
"Price issues could be discussed. However, I see no reason to create any measure to cap rises," Thai Deputy Agriculture Minister Supachai Phosu said.
Thai Deputy Prime Minister Suthep Thaugsuban in December had said the government would implement measures to keep the price of unsmoked rubber sheet above 80 baht ($2.42) per kg, a level profitable for farmers.
This raw material was quoted at 94 baht per kg on Thursday.
(Source: irco.biz)
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