Asian rubber producers agree to cut output, exports

Asian rubber producers agree to cut output, exports

KUALA LUMPUR (Reuters): Leading Asian rubber producers, Thailand, Indonesia and Malaysia agreed on Friday to reduce output by four percent in 2002 and 2003 and cut exports by 10 percent from January to support sagging prices.

"This will result in production cutbacks of approximately 155,000 tons in 2002 and 200,000 tons in 2003. This scheme will commence on January 1, 2002," said a joint statement released by ministers of the three countries.

"These measures constitute restricting new planting, accelerating replanting and diversification to other crop," said the statement issued at the ministerial meeting of the Tripartite Rubber Corporation (TRC).

The three countries, which make up almost 80 percent of the world's natural rubber production, set up the TRC taskforce last July to manage prices, production, stocks and trade.

Southeast Asian rubber prices are hovering around their lowest levels in 30 years on oversupply, and industry sources say the global economic slowdown has encouraged tire makers to cut output due to weak demand for new cars and trucks.

The ministers said they also agreed to implement the export carnet scheme starting next year and might ask exporters to limit their forward shipments.

"The scheme is aimed at bringing about a better balance between supply and demand through a cutback of 10 percent of exports of the three countries," the statement said.

Malaysia's Primary Industries Minister Lim Keng Yaik, said the three countries had abandoned an earlier plan to set up a buffer stock and would concentrate on the export and production cutbacks scheme.

"The market is totally dictated by consuming countries. At present moment, rubber is below 50.00 U.S. cents/kg. At 50 cents, you can't buy a cup of coffee in New York. I think it's a bit ridiculous," Lim told reporters.