INRO raises reference price by five percent

INRO raises reference price by five percent

KUALA LUMPUR (AFP): The International Natural Rubber
Organization (INRO) Tuesday raised its buffer stock reference
price by five percent to 206. 68 Malaysian/Singapore cents a
kilogram (2.2 pounds) at a special session here.

"The upward revision should bode well for the market and be an
encouragement to producers," INRO buffer stock manager James
Hegarty told reporters after the half-day meeting.

"It does increase the level at which the buffer stock can be
utilized in the market place," Hegarty said.

Tuesday's revision will enable the buffer stock manager to
enter the market earlier to buy rubber and prop up declining
prices as the intervention levels, which are pegged to the
reference price, will be raised by 15 percent and 20 percent
respectively.

The "may-buy" price will be raised to 176 Malaysian/Singapore
cents from 165, while the "may-sell" price will be 238 cents and
the "must-sell" 248 cents.

The reference price is reviewed every 15 months and will be
raised automatically by five percent if the INRO daily market
indicator price (DMIP) is above its upper intervention price in
the six months before the revision.

The revision had been based on the six-month DMIP average at
August 2 of 318.74 cents a kilogram. The DMIP is now at 235.82.

The reference price was fixed at 196.84 cents a kilogram
during the last revision in February 1993 after it was reduced by
five percent, Hegarty said.

Traders, reacting to the revision, said it will have little
impact on the market as the price would reflect the actual market
situation.

"Rubber prices have been low for a long time, and although the
current market is weak, it will pick up in the long term. Prices
are not going to go back to the lows of olden days," said Furui
Chiaki, of Singapore-based brokerage Yutaka Shoji.

The fundamentals have improved, and although production is
rising, consumption is catching up fast, Chiaki said.

Rubber prices, which had reached six-year highs last year,
have moderated since February on rising production and
speculative activities, brokers said.

"We should not only look at the US, Japan or Europe. We should
watch consumption in the booming Asian region," he said.

INRO groups six producer and 21 consuming countries. Among its
members are producer countries Malaysia, Indonesia, Thailand, and
consumers the United States, Japan and the European Union.

Hegarty said the special session also endorsed the appointment
of British national James Telfer Inglis, 55, as its deputy
executive director.

Inglis, who has worked with Uniroyal Europe and Dunlop and has
vast experience in the rubber and tire industry, replaces Jurgen
Knote who retired in December.