Malaysia rubber production falls 12%
Malaysia rubber production falls 12%
KUALA LUMPUR (Reuter): Weak prices have driven down Malaysian
natural rubber output by an estimated 12 percent in the first
quarter of 1997 compared to the year-earlier period, rubber
traders said yesterday.
Production between January and March 1997 is estimated at
257,000-260,000 tons, compared to 291,723 tons in the same period
of 1996, the traders told Reuters.
"The current prices which consumers are paying rubber
producers are just not enough to encourage production," said a
dealer with a foreign rubber broking house in Kuala Lumpur.
Malaysia is the world's third-largest rubber producer.
But its rubber market has been sluggish for more than six
months due to tiremakers and other rubber consumers seeking lower
prices. Traders said competition from cheaper Indonesian rubber
was also eating into Malaysia's rubber sales.
The price of Standard Malaysian Rubber is down by around six
percent in the last six months to an average 315
Malaysian/Singapore cents a kilogram. The price is a weighted
average of Singapore and Malaysian currencies.
The traders said lower prices will make it difficult for
rubber factories and growers to sustain their business.
Traders said smallholders, who own about 60 percent of
Malaysian rubber fields, were expected to produce about 160,000-
161,000 tons of rubber in the first quarter of 1997.
Privately run plantations were expected to contribute 56,000
to 57,000 tons while estates governed by the state's Federal Land
& Development Authority (FELDA) were forecast to provide between
41,000 and 42,000 tons, the traders said.
They also estimated the export of rubber would fall around
four percent to 230,000 tons during the first quarter of this
year against the 239,300 tons shipped out in the corresponding
period of 1996.
Europe is expected to be the largest consumer of Malaysian
rubber -- buying 58,000-59,000 tons -- followed by Korea, the
United States and China.
Traders said one positive trend was the growing local
consumption of latex, which jumped 89 percent.
Most of the 118,500 tons of dried latex sold to the domestic
market was for the manufacture of gloves, rubber linings for cars
and garments, and condoms, said traders.
The lower rubber output is also expected to lead to higher
imports of rubber from countries such as Thailand, the
Philippines, Liberia, Myanmar, Vietnam and Cambodia, traders
said.
They estimated the import of rubber to rise about 7 percent to
75,000 tons in the first quarter of this year, from the 70,029
imported during the same period of 1996.
Malaysia's Primary Industries Minister Lim Keng Yaik said last
week that natural rubber prices have been suppressed for too long
and urged major tire manufacturers and other users to support
reasonable prices.
"If there is no fair remunerative price for rubber, then
producers will be forced to cut back on production and rubber
prices will spiral like nobody's business," Lim warned.