INRO sales will not affect rubber price: Official

JAKARTA (JP): The planned sales of the entire stocks held by the International Natural Rubber Organization (INRO) will not affect the world's rubber prices, the organization's executive Hatanto Reksodiputro, said here on Monday.

Hatanto, who is also the Director for International Cooperation at the Ministry for Industry and Trade, said that fears that sales of the rubber stocks would cause a plunge in rubber prices were exaggerated.

"Actually, the people expressing such fears are probably hoping that rubber prices will fall, so that they can buy as much as they can," Hatanto told reporters on the sideline of the House of Representatives' state budget plenary meeting.

Last Friday INRO agreed in a meeting in Kuala Lumpur on a procedure for selling its stocks before the organization formally closes down.

In the meeting chaired by Hatanti, the organization's governing council approved the use of forward sales to dispose of the stock but limited these to six months forward.

The organization will clear its stocks at prevailing market prices by June, 2001.

However, traders warned that rubber prices would tumble to new lows, as traders could quote rubber at prices lower than current ones.s

They said that rubber demand should have risen, since synthetic rubber would become more expensive in coming months, because of the soaring crude oil prices.

But Hatanto dismissed their worries, saying that the 138,000 tons was only a small amount compared to world consumption.

Referring to a world tire producer, he said that such a company could consume 100,000 tons of natural rubber per month.

"So if INRO only releases 138,000 tons, what difference will it make," he said.

INRO, he said, agreed to sell its stock in the future market and was hoping that the sales would lift rubber prices.

The move is expected to give INRO flexibility in selling six months forward to profit from better deals.

Hatanto said that by March next year, the organization would have disposed of 110,000 tons of rubber, with 28,000 tons to follow within the remaining two months until June.

"We are convinced that by March 2001, when we have released INRO's rubber stock, prices will have reached 70 U.S. cents a kilogram," Hatanto explained.

At present, he said, international rubber prices for the rubber-smoke sheet type ranged between 59 cents to 60 cents per kilogram.

Separately, AFP news agency reported on Monday that INRO expressed its confidence it would meet June's deadline to sell its entire stock.

"I don't think we will have a problem selling (to meet the June deadline) but I suspect we will get very low bids in the early stage," said chief executive Arch Roberts.

INRO said that the sales of the buffer stock would start as soon as possible and members would be allowed to bid.

Roberts said INRO would not sell if the bids were too low.

"It is my decision at what price we sell," he told AFP. "We want to get the highest price."

He further said INRO would not set any price band to guide buyers. "We want them to give us an idea what a good price is."

Traders have said the sell-off will further depress international prices.

INRO announced in September last year that it would disband after Malaysia and Thailand announced they would quit the group for failing to support prices. Sri Lanka also quit.

Thailand is the world's largest natural rubber producer, followed by Indonesia and then Malaysia. (bkm)