INRO gets support from RI membership

INRO gets support from RI membership

TOKYO (Bloomberg): Indonesia's decision to remain a member of the International Natural Rubber Organization, a price-supporting cartel, should help keep the struggling group alive, an INRO official said on Friday.

"Indonesia must have realized that it will be much more expensive and much less efficient to go it alone rather than sticking with INRO," said Arch Roberts, a buffer stock manager at INRO.

Indonesian Minister of Industry and Trade Rahardi Ramelan said on Wednesday it would remain a member of INRO, despite defections from the group by Thailand and Malaysia, the first and the third biggest rubber producers, who are angered by a drop in rubber prices that INRO failed to prevent.

Thailand said last month it would pull out of INRO. Malaysia left the group last year. Thailand, Malaysia and Indonesia account for more than 80 percent of world rubber production.

Thai rubber exports totaled US$1.8 billion in 1997, while Indonesian exports reached $1.3 billion, according to the International Rubber Study Group.

Yoshikazu Hatta, a manager at Fuji Futures Corp. said Indonesia remaining as a member with INRO is unlikely to help push up rubber prices.

"INRO will survive but it won't be able to support rubber prices, because it hasn't been able to do so in the past few months," Hatta said.

Rubber futures in Tokyo have fallen 30 percent in the last six months.

The INRO group, which includes rubber producers and consumers, uses funds provided by members to buy rubber on the open market to support prices and releases supplies from buffer stocks when prices rise too high.

It's now short of money because some INRO members haven't paid their dues this year. Roberts said members will lose their votes unless they pay before the council meeting which takes place from April 20 to 23.

INRO has collected 80 percent of consumer countries contributions since it called for the dues last December, but no producer countries have paid yet, he said.

Thailand exported 1,837,100 metric tons in 1997, 41 percent of world exports, while Indonesia accounted for 31 percent. Malaysia's rubber exports accounted for 13 percent, according to the International Rubber Study Group.

On the Tokyo Commodities Exchange, rubber for August 1999 delivery, the most active contract, fell 1.9 yen, or 2.35 percent, to 79 yen (67 U.S. cents) a kilogram.