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.