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.