Rubber producers, consumers upbeat after 3-day meet

Rubber producers, consumers upbeat after 3-day meet

KUALA LUMPUR (Reuter): Delegates from key rubber producing and
consuming nations concluded three days of informal talks
yesterday expressing optimism that a global rubber-pricing pact
could be achieved this year.

The high-level working group meeting in Kuala Lumpur was held
ahead of U.N.-sponsored talks in Geneva this October to
renegotiate the International Natural Rubber Agreement (INRA).

"The informal talks have been constructive. I am optimistic
that we can reach an agreement in October," European Union (EU)
delegate Derrick Taylor told Reuters after the talks ended.

The working group comprises rubber producers Indonesia,
Malaysia and Thailand, and the top three consumers -- Japan, the
EU and the United States.

Delegates said U.N. rubber pact negotiating president Peter
Lai also appeared optimistic that a deadlock over pricing would
be resolved in the Geneva talks, scheduled for Oct. 3-14.

The rift between growers and consumers over the key pricing
issue blocked efforts to conclude negotiations on a new INRA in
Geneva last April.

Consumers, led by the United States, want no change in the
reference price, which has remained at 196.84 Malaysian/Singapore
cents per kg since the first pact was agreed in 1979.

The reference price is used to calculate when buffer stocks
can be bought or sold in the market. Producers say inflation and
the rising costs of production since 1979 both warrant an
increase in the reference price.

Understanding

"We both understand each other's positions better now after
having frank talks," Taylor said.

Other delegates expressed the same view.

"Both sides seem to be more sympathetic to each other's
position," said one delegate, who declined to be named. But he
said producers were still seeking a higher reference price.

Malaysia, the world's third largest producer of rubber, has
said a higher reference price would encourage small growers to
stay in business and ensure long-term supplies. It argues that
rubber's current strength could be temporary.

The talks were held as the International Rubber Organization's
(INRO) buffer stock manager was intervening in the market to sell
rubber held by INRO in an effort to arrest rising prices.

The EU last week demanded early and substantial sales from
INRO's buffer stocks in order to have maximum market impact.

INRO buffer stock manager Aldo Hofmeister responded by selling
an undisclosed amount of rubber in several markets, beginning
last Friday, from its warehouses in Britain, China, Malaysia and
Indonesia.

Taylor hoped that rubber prices would ease following INRO's
intervention this week. "EU member nations would think it is
illogical to pay for a buffer stock if it does not work," he
said.

Delegates said the Kuala Lumpur talks would be the last before
the 26 rubber-exporting and importing nations meet in Geneva.

At the last round of talks, the working group cleared 47 of
the 67 articles under review, but most were administrative and
non-controversial.

If no new agreement is reached the current pact, extended for
a year until December 1994, can be stretched for another 12
months, but would expire after that.