Rubber producers, users to decide on INRO fate

Rubber producers, users to decide on INRO fate

KUALA LUMPUR (Reuters): Rubber producing and consuming countries will meet in the Malaysian capital next week with the outcome likely to determine the future of the International Natural Rubber Organization (INRO).

Industry sources said it will be a crucial meeting to prevent a collapse of the world's only surviving producer-consumer commodity grouping.

"It will be crucial in that sense," a Malaysian official said.

Various committees within the organization will meet on Tuesday and Wednesday before full council talks on October 22 and 23.

"Important matters will be raised. It can be crucial," INRO deputy executive director Gerard Loyen told Reuters.

INRO runs a serious risk of foundering due to mounting opposition from producing countries over its failure to boost prices.

INRO intervenes in the rubber market by buying or selling when the price reaches pre-set levels and the price range is revised periodically in line with market trends.

But prices have suffered relentless pressure from tumbling consumption due to the Asian economic crisis and rising exports from Thailand and Indonesia where producers have cashed in on high local prices driven by depreciating currencies.

Malaysia, the world's third largest producer, has vowed to leave INRO, while top producer Thailand has said it is likely to follow suit. But Indonesia, the second largest producer, has pledged to stick by the accord.

Analysts said if Malaysia and Thailand were to leave, it could lead to INRO's demise because they hold a big chunk of votes on the producing countries' side.

INRO, which was set up in 1980 under the United Nations Conference on Trade and Development (UNCTAD), groups six rubber producing and 16 consuming countries.

The producers are Thailand, Indonesia, Malaysia, Ivory Coast, Nigeria and Sri Lanka. Consuming members are the United States, Japan, China, Germany, France, Austria, Belgium plus Luxembourg, Denmark, Finland, Greece, Ireland, Italy, the Netherlands, Spain, Sweden and Britain.

The rubber body expects some progress to be made during the meeting to heal the rift.

"We look forward to some kind of progress through measures to be proposed and discussed at the meeting. We expect both exporters and importers to be positive to reach a consensus," Loyen said.

INRO in its latest newsletter urged both rubber producing and consuming countries to work together with the organization and "not without INRO".