INRO studying price adjustment proposals<\/p>\n
KUALA LUMPUR (Reuters): The International Natural Rubber
\nOrganization (INRO) said on Wednesday that member countries are
\nstudying three proposals for adjusting its intervention price
\nrange.<\/p>\n
INRO buffer stock manager Arch Roberts said in an interview
\nthat the organization's governing council was expected to discuss
\nthe proposals at its next meeting, set for April 21-24 in the
\nMalaysian capital.<\/p>\n
Under the first proposal, supported largely by producers,
\nINRO's reference price would be raised by six percent to 227.85
\nMalaysian\/Singapore cents per kg, and intervention levels would
\nbe adjusted upwards accordingly.<\/p>\n
The new \"may-buy\" level would be 194 cents and \"must-buy\"
\nwould be at 182 cents. The \"may-sell\" threshold would be at 262
\ncents and \"must-sell\" at 273.<\/p>\n
Currently, the reference price is 214.95 cents, while the
\n\"may-buy\" is at 183 cents, the \"must-buy\" at 172, the \"may-sell\"
\nat 247 and the \"must-sell\" at 258.<\/p>\n
Roberts said some members led by the United States believed
\nthat such a change would require an amendment to the
\nInternational Natural Rubber Agreement which would face the
\ndifficult prospect of having to clear the U.S. Senate.<\/p>\n
Under the second proposal, the price band around the reference
\nprice would be narrowed by six percent. The reference price would
\nremain at 214.95 cents, but the intervention levels would change,
\nwith \"may-buy\" at 196 cents, \"must-buy\" at 185, \"may-sell\" at 234
\nand \"must-sell\" at 245.<\/p>\n
INRO said that under this proposal, initial call-up might be
\nhigher but the narrower band might require the buffer stock
\nmanager to sell stocks earlier, resulting in a reduction in the
\noverall funds requirement.<\/p>\n
This proposal could be adopted by a special vote of the
\ncouncil and would not require an amendment to the agreement.<\/p>\n
Under the third proposal, a single currency, perhaps the
\nSingapore dollar, would replace the daily market indicator price
\n(DMIP) for INRO's price range, currently a hybrid of the
\nMalaysian ringgit and the Singapore dollar.<\/p>\n
INRO estimates that to achieve the equivalent of a six to
\nseven percent increase in the reference price, the existing price
\nrange would, for example, have to be converted to the Singapore
\ndollar at its exchange rate of mid-October 1997, Roberts said.<\/p>\n
INRO must buy rubber if the five-day moving average price hits
\n172 Malaysian\/Singapore cents a kg. INRO's average quoted price
\non Wednesday was 175.04 cents per kg, putting it in the range of
\nbetween 172 and 183 cents where INRO may buy.<\/p>\n
INRO last bought rubber in December, but Roberts said the
\norganization ran out of funds and did not buy as much as it would
\nhave liked.<\/p>\n
Indonesia, Malaysia and China have not yet paid their
\ncontributions to a 150 million Malaysia ringgit call-up of funds
\nfrom last August, he said. \"We are told those funds are
\nforthcoming,\" he said.<\/p>\n
Three member governments -- Denmark, Greece and Sweden -- have
\npaid their contributions to a second call-up of 200 million
\nringgit of funds which was made in December and is due on
\nFebruary 9, he said.<\/p>\n
The United States, France, Germany and the United Kingdom have
\nissued payment instructions for the second cash call, and Japan
\nwas expected to pay on time, he said.<\/p>",
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