Projections blamed for fall in rubber prices

Projections blamed for fall in rubber prices

KUALA LUMPUR (AFP): Malaysia yesterday blamed bloated projections of rubber output by rival producing countries for the 30 percent fall in prices in the last few months just when the market were enjoying its six-year highs.

Primary Industries Minister Lim Keng Yaik said the recent figures provided by producers to the Association of Natural Rubber Producing were "unrealistically higher and painted a surplus situation."

That drove down prices as consumers halted buying in anticipation of lower prices, Lim was reported saying in northern Perak state.

He said Tuesday's move by the International Natural Rubber Organization (INRO) to raise its buffer stock reference price by five percent to 206.68 Malaysian/Singapore cents a kilogram (2.2 pounds) was appropriate as it would stabilize prices.

INRO groups six producer and 21 consuming countries. Among its members are producers Malaysia, Indonesia and Thailand and consumers the United States, Japan and the European Union.

The revision would allow the INRO buffer stock manager to enter the market earlier to buy rubber and prop up declining prices as the intervention levels, which are pegged to the reference price, will be raised by 15 percent and 20 percent respectively.

Lim reiterated the need for producers to stay united and stop undercutting each other as this would benefit only consumers.

"Since we (producers) are unable to put our act together, we are always bullied and dominated by consuming countries," Lim said.

Traders blamed the current fall in prices on market manipulation and speculation.

"Fundamentally, the market should remain high and prices will pick up in the longer term," a Singapore-based trader said.

He said although production was rising, consumption was fast catching up, particularly in the Asian region, particularly in China and Japan.