Recent moves by Thailand, the world's largest natural rubber producer and exporter, have shored up the commodity's prices, which fell sharply this month from record high levels in February.
The Thai government, through the International Rubber Consortium, has asked Indonesia and Malaysia to maintain prices after Thailand announced a minimum price for the commodity, IRCo acting Chief Executive Yium Tavarolit said Thursday.
IRCo comprises officials and exporters from Thailand, Indonesia and Malaysia, which collectively account for about 70% of global natural rubber output.
Yium said the three members have agreed to work together on any potential price control measures, which could include export suspension below a certain price level.
In late 2008, IRCo members had decided to reduce supply in 2009, but the measure didn't kick in as prices recovered.
Yium said Tuesday that the three countries would meet this week to discuss measures to stem falling prices, but that meeting is now on hold as prices have recovered somewhat and as the Thai authorities hold their own meeting first.
Meanwhile, the Thai authorities and industry players have also been taking steps to support the market. Thailand accounts for about one-third of global rubber output.
Deputy Prime Minister Suthep Thaugsuban Monday pledged to maintain local rubber prices at no less than THB120 a kilogram. He also urged suspension of exports and is calling for a meeting of agencies Monday to discuss the measure, the Bangkok Post reported Wednesday.
Meanwhile, leaders of the Rubber Growers Cooperative Federation of Thailand will meet Prime Minister Abhisit Vejjajiva next week to ask the government to intervene in the issue of falling rubber prices, the paper said Thursday.
Yium said agricultural authorities in Thailand will also meet soon to discuss the issue of price controls before contacting Indonesia and Malaysia.
IRCo said Wednesday it is also setting up a joint working group with the China Rubber Industry Association to counter price volatility. China is the world's largest consumer and importer of the commodity.
The moves by Thailand have boosted prices, with Thai unsmoked sheet 3-grade rubber breaching the THB120/kg level Thursday at the central markets versus THB89.00-THB102.59/kg Monday.
Traders and farmers are also taking cues from Suthep's statement to stockpile the commodity and to not try to push prices down, said a trader in southern Thailand.
This sent USS3 arrivals down to 3.5 metric tons Thursday at the central markets--down from 122.5 tons Monday.
On the bellwether Tokyo Commodity Exchange, whose benchmark contract rubber price has been recovering since Wednesday, the August contract settled at Y396.9/kg Thursday, off a fourth-month low of Y335 Tuesday.
Tocom rubber prices hit a record high of Y535.7/kg on Feb. 18 before sliding sharply, as market sentiment was damped by geopolitical tensions in the Middle East, tightening fears in China and the earthquake and tsunami in Japan, despite the fact that major producing countries are in the low-production season.
(Source: http://www.irco.biz/BlogMoreDetial.php?id=2732&ShowContent=news)
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