INRO ready to resume rubber market intervention

INRO ready to resume rubber market intervention

LIVERPOOL, England (Reuter): The head of the International Natural Rubber Organization (INRO) said the group is now set to resume rubber market intervention to stabilize prices following the launch of a new global accord.

INRO executive director Ahmad Zubeir Noordin told a industry gathering here that all matters relating to the coming into force of the new International Natural Rubber Agreement (INRA) had been finalized.

"INRO is now primed to resume its activities and play its role for the attainment of the objectives of INRA 3, both in relation to price stabilization and commodity development aspects," he said at the International Rubber Study Group (IRSG) meeting.

Two cycles of the agreement -- INRA 1 and INRA 2 -- have been completed. Both were also administered by the Kuala Lumpur- based INRO.

The new four-year INRA was negotiated in 1995 but did not come into force until February this year.

Zubeir of Malaysia said the new accord comprised six exporting nations, who account for 99 percent of world's output, and 16 consumer states including the United States and the European Union.

INRA is the world's only working commodity pact with a buffer stock mechanism.

Zubeir said INRO had revised its so-called reference price, which guides buying and selling of rubber, to 214.95 Malaysia/Singapore cents a kg on March 11 from 206.68 cents previously.

Four grades of natural rubber have also been named for inclusion in the buffer stock. They are RSS1, RSS3, TSR10 and TSR20, he said.

It has also decided to re-establish, on a retainer basis, offices in London and New York, he added.

INRO had disposed all of its stockpiled rubber under the last agreement in a bid to cool soaring prices in 1995.

World prices have since dropped to hit a 36-month-low in April this year but still not low enough to warrant intervention buying by INRO.

In Jakarta, Indonesian tire-grade SIR20 offer prices were generally stable in noon trading yesterday following deals in Palembang and Surabaya, traders said.

They said Singapore dealers bought rubber at 47.00 U.S. cents/lb fob Palembang for August shipment while European dealers purchased SIR20 at 47.125 fob Surabaya for July shipment.

In Kuala Lumpur, dealing houses offered SMR 20 at 258-259 cents, SMR CV at 328, SMR L at 307, SMR 5 at 270 and latex rubber at 224.

At midday close, Malaysian Rubber Exchange and Licensing Board quoted July RSS1 buyer at 282.50 cents ($1.12) a kg, unchanged from Wednesday. July SMR 20 buyer eased half a cent to 259.50.

A Malaysia-based shipping agent quoted freight rates for rubber from Malaysia to Rotterdam at $800 per TEU (or 20-ft container), and $1,700 per two-TEU containers (or 40-ft container).