EU says rubber talks promising

EU says rubber talks promising

SINGAPORE (AFP): The European Union (EU) said it is "very optimistic" of a successful outcome this week to ongoing talks on a new natural rubber agreement as there are only two major differences to be resolved.

EU spokesman Derek Taylor said in a statement released to AFP Monday that "it is clear that there are several similarities between the proposals made by consumers and those made earlier by producers."

"There are only two major differences between the proposals of consumers and those of the producers," said Taylor, who is attending talks which started in Geneva last week to conclude a new International Natural Rubber Agreement (INRA).

He said the first difference had to do with the structure of the price ranges used for the buffer stock, with producing countries seeking to strip the buffer stock manager of his discretionary powers.

"There is absolutely no possibility that the consumers would accept this proposal," Taylor said.

The buffer stock manager buys rubber for his stockpile when prices are too low and sells his stocks when they are too high to stabilize prices within a band agreed by consumers and producers.

The existing agreement allows him to use his discretion in deciding whether or not to buy or sell rubber when his Daily Market Indicator Price (DMIP) hit the so-called "may-buy" or "may-sell" levels.

It is mandatory for the buffer stock manager, a nominee of consuming countries as provided by the agreement, when the lower "must buy" or higher "must sell" levels are triggered.

The "may-buy" level is 167 Malaysian/Singapore cents a kilo, the "must-buy" is 157 cents while the "may-sell" is 226 cents and the "must-sell" is 236 cents.

The DMIP is culled from prices of three grades of rubber in Kuala Lumpur, Singapore, London and New York and is quoted in a composite currency.

Producers have complained that the buffer stock manager has in the past been too quick to sell when prices are high and tardy to act when prices fall.