INRO to exhaust stockpile if price rises continue
INRO to exhaust stockpile if price rises continue
KUALA LUMPUR (AFP): The International Natural Rubber Organization (INRO) would unload its entire 220,000-ton stockpile if the current surge in rubber prices continues unabated, INRO buffer stock manager Aldo Hofmeister said yesterday.
"We have sold a sizable amount, which seems to have no impact yet on prices. There is a real shortage and we will go on selling until we run out to fill that void in the current bullish market," Hofmeister told AFP.
Hofmeister, who on Friday began INRO's first sell-off in five years to cool the market, said he had never anticipated such a voracious appetite for short-term rubber.
"Everybody seems to be short of rubber at this juncture. Japan is short. China needs rubber badly now ... The situation seems just unreal," Hofmeister said, as he offered to sell in Kuala Lumpur the consumer grade of SMR 20 at 250 Malaysian sen (100 U.S. cents) a kilogram (2.2 pounds).
"We are getting a lot of enquiries for more rubber in China particularly," Hofmeister said.
Traders said the current shortage was triggered by overselling in Thailand, which had committed to sell 100,000 tons and was now unable to deliver.
Hofmeister declined to put a figure to the current shortage, but traders said their conservative estimate would put the crunch at over 150,000 tons.
On Friday, Hofmeister was estimated to have sold 30,000 tons of the whole range of consumer grades RSS 1, RSS 3 and SIR 20 from INRO's warehouses in China and Indonesia.
On Monday, regional traders snapped up INRO's sale of the same grades, as well as SMR 20, in Kuala Lumpur but did not buy the following day when the organization rejected their bids at wider discounts.
Failure
INRO's selling had failed to cap the price run-up, as INRO's five-day moving average price, the range that guides the buffer stock manager's market interventions, was steadily edging towards the crucial "must-sell" trigger of 236 Malaysian-Singapore cents, a composite currency.
The DMIP was at 232.93 Malaysian-Singapore cents a kilogram on Tuesday, after surging past the "may-sell" level of 226 cents a week ago.
The Kuala Lumpur-based INRO was set up by six producer and 21 consuming nations to stabilize prices within an agreed band under a now-expired 14-year pact. It was extended for a year until December pending negotiations on a new accord.
Meanwhile, UN negotiator Peter Lai was yesterday meeting three key producers -- Thailand, Indonesia and Malaysia -- and consumers from the United State, the European Union and Japan in a last ditch bid to bridge differences to ensure successful conclusion of the accord in Geneva in October.
The three-day session that began Tuesday would be the final round of informal consultations before the UN-sponsored negotiations are held in Geneva from Oct. 3 to Oct. 14.