INRO begins meeting with future in doubt

INRO begins meeting with future in doubt

KUALA LUMPUR (Reuters): The International Natural Rubber
Organization (INRO) began a meeting of its policy-making council
on Thursday which officials said could determine the fate of the
world's last commodity pact with economic clout.

The council was expected to decide on a proposal to adjust
INRO's intervention price range at the two-day meeting in the
Malaysian capital, officials said.

A press communique would be issued at the end of the meeting
on Friday, INRO said in a statement.

Industry officials said INRO's governing council was likely to
approve a proposal to raise the group's reference price in a
last-ditch attempt to persuade Thailand and Malaysia to
reconsider their decision to leave the organization.

But a Thail deputy minister said on Thursday it would not
review its withdrawal decision even if reference prices changed.

Under the proposal, INRO's reference price would be raised by
six percent to 227.85 Malaysian/Singapore cents per kg, and
intervention levels would be adjusted upwards accordingly.

The new "may-buy" level would be 194 cents and "must-buy" 182
cents. The "may-sell" level would be 262 cents and "must-sell"
273 cents.

The reference price is currently 214.95 cents, while the "may-
buy" level is 183 cents, the "must-buy" 172, the "may-sell" 247
and the "must-sell" 258.

Thailand and Malaysia have complained that the intervention
level is too low and should be raised.

Several attempts have been made by INRO's governing council to
adjust the price range to reflect Asia's economic conditions, but
no consensus has been reached yet.

Barring any second thoughts, Malaysia will leave INRO on
October 15 after a year's notice while Thailand has said it would
also quit. Both countries said INRO failed to shore up rubber
prices, now at long-term lows.

Thailand said on Thursday it may resume local rubber market
intervention to boost prices.

Industry officials said INRO was doomed to collapse with the
withdrawal of Thailand and Malaysia, which together account for
more than 50 percent of the world's production.

Officials said the council would also decide on a proposal to
replace the daily market indicator price for INRO's price range,
currently a hybrid of the Malaysian ringgit and the Singapore
dollar, by a single currency, perhaps the Singapore dollar.

"This could result in a larger increase in the reference price
than what the producers had asked for," an official said.

Some delegates said council members might not be able to
decide on INRO's fate this week and put off a decision until
July.

INRO, set up in 1980 to stabilize world rubber prices under
the U.N. Conference on Trade and Development (UNCTAD), groups six
rubber producing and 16 consuming countries.

The producers are Thailand, Indonesia, Malaysia, Ivory Coast,
Nigeria and Sri Lanka.

Consuming members are the United States, Japan, China,
Germany, France, Austria, Belgium, Luxembourg, Denmark, Finland,
Greece, Ireland, Italy, the Netherlands, Spain, Sweden and
Britain. Belgium and Luxembourg are considered as one member.