Rubber producers pin hopes on output cut to boost prices
Rubber producers pin hopes on output cut to boost prices
KUALA LUMPUR (Reuters): Asian rubber producers, against a background of regional crisis, agreed at a meeting on Wednesday to cut output in an attempt to lift sinking prices, officials said.
"Producers have agreed at the meeting to cut production. Thailand will cut by at least 10 percent," Sanit Samosorn, deputy director-general at Thailand's agriculture department, told Reuters at the end of the meeting among leading producers.
"If prices do not recover, we will take stronger measures," he added, without giving further details.
Thailand, the world's biggest rubber producer and exporter, was expected to produce 2.2 million tonnes this year and 80 percent of that would be exported.
Rubber prices have plunged since Asia's financial crisis started in July last year and there are no signs of a recovery in demand.
Producers have hit out hard at the International Natural Rubber Organization (INRO), saying the market-stabilizing body must go after failing to support the market.
INRO groups major producing and consuming countries. It buys and sells at set levels to stabilize prices.
Producers have tried in vain in the past few months to get INRO to raise its buying levels to support the market.
Producing countries discussed production and marketing strategies at the three-day, closed-door meeting of the Association of Natural Rubber Producing Countries (ANRPC), but officials disclosed few details of the discussions.
"The agreement of the meeting will go back to member countries," ANRPC secretary-general Gnoh Chong Hock said.
The ANRPC groups Thailand, Malaysia, Singapore, Sri Lanka, India, Papua New Guinea, Indonesia and Vietnam. Indonesia and Vietnam were not present at the meeting.
"Activities for implementing these strategies will be submitted to the ANRPC assembly scheduled to be held in Vietnam in November 1998," ANRPC said in a statement released at the end of the meeting.
"In the interim, individual countries will work out their respective mechanism to initiate measures to adjust supply to stabilize prices," it said.
Industry sources have said it would be hard to implement output or export controls as most Asian countries needed hard currency from exports during the crisis.
"Theoretically producers will carry out measures such as export and supply controls after the meeting, but it's hard to tell how much can be done when times are bad," said one delegate. Most delegates shared the same view of INRO's future.
"We will definitely leave INRO, no matter what other countries will do," said a Malaysian official.
Sopon Watcharasint, a director at Thailand's ministry of agriculture, said INRO should be allowed to become history.