Thailand, Indonesia, Malaysia quit INRO<\/p>\n
SINGAPORE (Bloomberg): The world's top three rubber producers
\n-- Thailand, Indonesia and Malaysia -- said they will pull out of
\nthe International Natural Rubber Organization and set up a rival
\ngroup that aims to cut production 20 percent below world demand.<\/p>\n
The three countries, accounting for 80 percent of world rubber
\nproduction, are angered by a lack of action by the rubber group,
\nknown as INRO, to stem a 30 percent slide in rubber prices in the
\nlast year. The countries said they will withdraw all their funds
\nfrom INRO, depleting its intervention reserves and leaving the
\nrubber cartel largely ineffective.<\/p>\n
\"The withdrawal of the three countries will put into question
\nthe existence of INRO,\" said Gerard Loyen, INRO's deputy
\nexecutive director in Kuala Lumpur. He said withdrawal by any
\nmember is effective after one year, although the INRO council has
\nthe option to dissolve the cartel before that.<\/p>\n
Rubber prices have fallen as industrial production in Asia
\nslumped along with economies across the region, pulling down
\ndemand for cars and tire sales<\/p>\n
Loyen said with supplies still outstripping demand, prices
\n\"may continue to slip\" should INRO be liquidated.<\/p>\n
Market Buys<\/p>\n
While producer members of INRO complain about the lack of
\nintervention in the market by the cartel earlier this year, it
\ndid buy rubber on the market in the past two weeks. Those
\npurchases, though, did little to support prices.<\/p>\n
INRO bought around 30,000 metric tons of natural rubber last
\nweek, spending as much as 100 million ringgit ($23.8 million),
\ntraders said. INRO wouldn't confirm those purchases.<\/p>\n
No matter how much they are buying, \"there is still too much
\nrubber in the market,\" said Singapore-based Kang Liat Bin,
\nmarketing manager with Sahabat Co., a subsidiary of privately
\nheld PT Kirana Megatara, one of Indonesia's largest rubber
\nproducers.<\/p>\n
As rubber prices fell in the past year, consumer members of
\nINRO benefited, adding to the anger among producer countries.<\/p>\n
\"INRO isn't receptive to our needs and is incapable of
\nrendering immediate assistance in price adjustment,\" Thailand's
\nDeputy Agriculture Minister Somchai Soonthornvat said.<\/p>\n
He added that \"some concrete action\" will be seen within a
\nmonth on setting up a new rubber group.<\/p>\n
Soonthornvat said the decline in rubber prices has caused
\nhardship to Thailand's six million growers, at a time when the
\ncountry is suffering from an economic crisis.<\/p>\n
The withdrawal of funds from INRO by the three countries
\namounts to 200 million baht ($4.9 million) for Thailand and 29
\nmillion ringgit ($6.9 million) for Malaysia. The figure for
\nIndonesia wasn't immediately available.<\/p>\n
As for the new group they plan to set up, it will include the
\nthree largest producers and Singapore, said Malaysia's Primary
\nIndustries Minister Lim Keng Yaik.<\/p>\n
Other possible members include producer members of the
\nAssociation of Natural Rubber Producing Countries (ANRPC), he
\nsaid. The ANRPC met today in Bangkok.<\/p>\n
The ANRPC is an intergovernmental group that promotes
\nproducers' interest and runs development programs for small
\nfarmers. Its members are Thailand, Indonesia, Malaysia,
\nSingapore, Vietnam, Sri Lanka, India and Papua New Guinea.<\/p>\n
Singapore is the only member that doesn't produce natural
\nrubber.<\/p>\n
INRO includes 18 importing and six exporting countries. It
\nmanages the third United Nations-backed International Natural
\nRubber Agreement, which came into force in February 1997. This
\nagreement to stabilize world natural rubber prices extends
\nthrough 2001.<\/p>\n
Ribbed Smoked Sheet 3 rubber for October delivery on the
\nSingapore Commodity Exchange rose 1.6 percent to 64 cents a
\nkilogram.<\/p>",
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