INRO keeps eye on weak world rubber prices<\/p>\n
KUALA LUMPUR (Reuters): The International Natural Rubber
\nOrganization (INRO) said yesterday it has a fund of 90-100
\nmillion ringgit ($21.6 million-$24 million) for immediate use to
\ndefend weak prices.<\/p>\n
"INRO has a usable fund of 90-100 million ringgit for
\nimmediate use for buffer stock manager purchases," Ng Kok Tee,
\nINRO's senior buffer stock officer, told Reuters in an interview.
\nIt could call up additional funds if required, Ng said.<\/p>\n
The producer-consumer group, based in Kuala Lumpur, intervenes
\nin the world markets to help stabilize rubber prices. The group
\nadministers the International Natural Rubber Agreement (INRA),
\nthe world's only working economic commodity pact.<\/p>\n
The producer members are Ivory Coast, Indonesia, Malaysia,
\nNigeria, Sri Lanka and Thailand. The United States, the world's
\nlargest rubber consumer, and the European Union are the major
\nconsumer states.<\/p>\n
Under INRO rules, the buffer stock manager can stockpile up to
\n550,000 tonnes of rubber, mopped up from the world's established
\nrubber markets in Kuala Lumpur, Singapore, London and New York.<\/p>\n
Ng said the last time INRO bought rubber was in the early
\n1990s.<\/p>\n
"The buffer stock manager has to exercise his judgment before
\nhe intervenes in the market," Ng said.<\/p>\n
Under INRO rules, the buffer stock manager may buy rubber when
\nthe group's five-day moving average price falls to 183
\nMalaysian\/Singapore cents a kg. He must buy at 172.<\/p>\n
The price, based on the average price of the previous five
\ndays of daily indicator price (DMIP), stood at 190.38 cents a kg
\non July 7.<\/p>\n
The DMIP is calculated from a composite weighted average of
\nnatural rubber prices reflecting two currencies (Malaysian
\nringgit and Singapore dollars) and four grades of rubber (RSS1,
\nRSS3, TSR10 and TSR20) from the four established markets.<\/p>\n
Singapore's TSR20 spot price was near a year low at 57.25 U.S.
\ncents a kg.<\/p>\n
"Under the normal buffer stock operation, INRO can buy up to
\n400,000 tons of rubber to stabilize prices. If the need arises,
\nINRO has a mandate to purchase a further 150,000 tons under the
\ncontingency buffer stock," Ng said.<\/p>\n
INRO has 32 designated warehouses in consuming and producing
\ncountries. Delivery is either local or a free on board (FOB)
\nbasis.<\/p>\n
Ng said INRO had disposed of its entire stockpile of rubber of
\n240,000-250,000 tons in 1995 under the previous pact.<\/p>\n
Ng, previously chairman of the Malaysian Rubber Exchange and
\nLicensing Board, said he was confident that the global rubber
\npact would stay despite threats of pull-outs by producer members.<\/p>\n
"Based on the past experience INRO itself has been existing
\nfor 18 years, we are optimistic that the INRA will continue as
\nlong as it can," Ng added.<\/p>\n
"I think both producers and consumers have benefited from the
\nprice stabilization in the pact."<\/p>\n
The current pact came into force in February 1997.<\/p>\n
Thai, Malaysian and Indonesian ministers will meet on July 24-
\nJuly 25 to formulate a common stance on whether to withdraw from
\nINRO.<\/p>\n
Thailand, the biggest producer, has been unhappy with INRO
\nafter failing to convince the grouping to raise market
\nintervention prices.<\/p>\n
In Indonesia, the rubber market ignored the news about INRO.<\/p>\n
They said November tyre-grade SIR20 was done on Monday night
\nat 28.25 U.S. cents\/lb fob Palembang while October rubber was
\nsold at 27.25.<\/p>\n
September rubber was sold at 26.00 fob Jambi.<\/p>\n
"It's another quiet day. There are no fresh leads and the
\nmarket has ignored the news about INRO," said one Jakarta-based
\ntrader.<\/p>",
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