IRCo to defend rubber price at 110 U.S. cents

IRCo to defend rubber price at 110 U.S. cents

Zakki P. Hakim, Jakarta

Three major producing countries are preparing to intervene in the
market to help stabilize the sagging price of rubber, according
to an official.

The Committee on Strategic Market Operations (CSMO), set up on
July 26 by Thailand, Indonesia and Malaysia, will step in to
ensure that rubber prices do not fall below 110 U.S. cents per
kilogram.

"Should the market price touch the preference price of 110
cents, the CSMO will intervene in the market by buying and
holding the commodity as a buffer stock," said Association of
Indonesian Rubber Producers (Gapkindo) executive director
Soeharti Honggokusumo on Friday.

Soeharti said that the committee would meet on Monday in
Bangkok to discuss the details of the plan.

The three countries formed a grouping called the International
Rubber Consortium Limited (IRCo) last year in a bid to push
rubber prices higher. IRCo, which then set up the CSMO, has
sufficient funds to undertake market operations.

According to Soeharti, the planned measure was part of the
effort to avoid any reoccurrence of the traumatic event of 2001,
when the rubber price crashed to a 30-year low of 45 cents. The
price bounced back in late 2002 to reach 130 cents, but has been
steadily declining since then to date. The price of the commodity
on Friday stood at 112.5 cents, while the highest price in the
last ten years was in 1995, when it stood at 155 cents.

Indonesia is the second largest natural rubber producer in the
world after Thailand. Producing 1.79 million tons in 2003,
Indonesia exported 91 percent of national production.