Rubber producers to propose raising INRO's reference price<\/p>\n
KUALA LUMPUR (AFP): Rubber producers said yesterday they would
\npress for a rise in the International Natural Rubber Organization
\n(INRO) reference price to enhance its market intervention
\nfollowing the current price surge.<\/p>\n
\"It sure is time to adjust the reference price. We will
\ndiscuss this at next month's INRO special session,\" said Sucharit
\nPromdej, executive director of the Association of Natural Rubber
\nProducing Countries.<\/p>\n
The executive council of the Kuala Lumpur-based INRO, which
\nyesterday was selling from its stockpile for the 11th trading day
\nto calm prices, is to convene a special session on Aug. 22 to
\ndiscuss the state of stockpile sales.<\/p>\n
A special session has to be convened for every net change of
\n100,000 tons or more in INRO's stockpile.<\/p>\n
As of yesterday, INRO's 220,000-ton stockpile had shrunk by
\nmore than 100,000 tons since it began selling on July 8 in what
\nis still perceived as an unsuccessful bid to subdue the sizzling
\nrubber market, where prices have bounced 40 percent in the past
\nthree months to six-year highs.<\/p>\n
Based on a determined reference price, INRO's six producer and
\n21 consumer member-nations have set specific limits for the
\nbuffer stock manager to buy when rubber prices decline and sell
\nwhen they rise.<\/p>\n
The manager \"may buy\" when INRO's daily moving indicator price
\n(DMIP) falls to 167 Malaysian-Singapore cents a kilogram (2.2
\npounds), but he \"must buy\" when it hits 157 cents. He \"may sell\"
\nwhen it rises to 226 cents and \"must sell\" at 236 cents.<\/p>\n
The DMIP, culled from average prices in the London, New York,
\nSingapore and Kuala Lumpur markets, broke the \"must sell\" level
\nto 241.46 cents on Thursday.<\/p>\n
Shortage<\/p>\n
\"The current surge was initially due to a fundamental shortage
\nin supply in producing areas, but speculative buying in the later
\nstage has driven up prices to an unrealistic level,\" said
\nSucharit.<\/p>\n
INRO's sales would have filled the vacuum if the uptrend was
\npurely driven by a supply crunch, he said.<\/p>\n
In Tokyo, prices soared as much as 10 yen in early trade.
\nDemand was outstripping supply, particularly in China, Hong Kong
\nand Taiwan, but speculators were fanning the price hike, traders
\nsaid.<\/p>\n
\"We have never experienced such a sharp hike since the 1988
\nrun-up, which was due then to the AIDS (Acquired Immunity
\nDeficiency Syndrome) scare,\" said Sucharit. Then, demand surged
\nfor protective gloves and condoms.<\/p>\n
INRO officials said the organization was prepared to unload
\nthe entire stockpile if necessary to calm the market.<\/p>\n
But analysts said it would very soon run out of rubber if the
\nprice surge continues unabated.<\/p>\n
Malaysian Primary Industries Minister Lim Keng Yaik, baffled
\nby the historic surge, said on Thursday that it was a clear proof
\n\"as to what can happen if commodity prices are depressed at low
\nlevels for too long.\"<\/p>\n
\"Consumer members of INRO should study the reasons behind the
\nsurge and give in to the producer members' demand during the
\nnegotiations of the new International Natural Rubber Agreement in
\nGeneva in October,\" Lim said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rubber-producers-to-propose-raising-inros-reference-price-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}