Rubber nations weigh withholding stocks

Rubber nations weigh withholding stocks

PENANG, Malaysia (Reuters): The time has come for top rubber
producing states and not consumers to dictate the rubber market,
Indonesia said on Monday as officials met to consider withholding
stocks to defend flagging prices.

"The spirit is there for us as the world's top rubber
producers to have bargaining power so that prices will be better
and not controlled by buyers," said Herry Soetanto, director for
multilateral cooperation at the Indonesian trade and industry
ministry.

"It can't be achieved overnight. What's important is the
spirit is there and this has never happened before," he said.

Soetanto was speaking to Reuters ahead of a meeting of senior
officials from Thailand, Indonesia and Malaysia on the Malaysian
resort island of Penang. The three nations account for almost 80
percent of the world's rubber production.

One subject of the meeting, said Soetanto, was stock
withholding.

"It is possible to hold stocks, but the problem is how long
should it last? What about farmers, whether when we hold stocks
we don't buy from farmers," said Soetanto, adding that such a
program, if implemented, needed full cooperation from the three
countries.

"We can't do this recklessly. What if one country holds and
the other doesn't?" he said.

Soetanto said the meeting would also discuss several issues
such as rubber export management.

It will also hammer out details of a scheme to set a joint
minimum selling price for rubber.

Rubber prices had recently tumbled to 23 U.S. cents per lb,
their lowest level in 30 years, mainly due to a glut in supply
and weak demand. Prices are now hovering at around 26 cents.
Thailand is the world's top producer followed by Indonesia and
Malaysia.

The Penang meeting precedes a ministerial meeting originally
scheduled for Sept. 14-15 in Thailand.

But the Thai talks had been postponed because of the tight
schedule of the ministers of each country. No new date has been
set, but Soetanto said the meeting could be held at the end of
October.

Thai rubber exporters said last week they welcomed a move to
set a minimum price below which the three countries would agree
not to sell.

Most Thai exporters want the scheme to apply only to
technically specified rubber (TSR) grade or tire grade, which is
produced by the three countries.

Soetanto said the Penang meeting was unlikely to discuss
earlier plans by the three producers to buy and sell 140,000
tons of stocks held by the defunct International Natural Rubber
Organization (INRO).

"I don't think so. We will only concentrate on our future plan
-- on the world's rubber trade and prices," he added.