Top rubber producers split on export cuts

Top rubber producers split on export cuts

Vissuta Pothong, Reuters, Bangkok

Exporters and officials from the world's top rubber producers, Thailand, Indonesia and Malaysia have wrapped up a closed-door meeting divided on whether to cut export quotas to boost prices, officials said on Thursday.

"The governing council of the International Tri-Partite Rubber Council (ITRC) meeting discussed several issues, including implementation of what we have earlier agreed in principle," Prasat Kesawapitak, director of Rubber Research Institute of Thailand, told Reuters.

The ITRC comprises senior officials and private exporters from Thailand, Indonesia and Malaysia, which account for almost 80 percent of the world's natural rubber production.

Ministers from the three countries agreed last December to cut output by four percent and exports by 10 percent starting this year to try to boost rubber prices, which fell late last year to 30-year lows below 50 U.S. cents/kg.

But the ITRC members were split on whether to formally cut export quotas to match the commitment, with Prasat saying Malaysia and Thailand were hesitant.

"Malaysia did not mention how to cut exports by 10 percent, they just said that the country's rubber exports are already small," Prasat said.

Malaysia, which said it planned to give farmers money to replant with new trees to cut output, produces around 600,000 tons of rubber a year with production already declining in recent years leading to increasing imports.

It takes around seven years for rubber tapping to start again after replanting.

Thai benchmark RSS3 rubber was quoted at around 60 U.S. cents/kg this week.

Thailand, the largest producer, was also hesitant on cutting quotas, saying exports were falling naturally anyway through measures it was taking to reduce output.

"We have told the meeting that we plan to replant 56,000 hectares (140,000 acres) starting from this year in order to cut output," Prasat told Reuters.

"However, we do not think it is necessary for the time being to cut exports as we already forecast that the country's exports this year would be lower than previous years, at around 1.97 million tons, due to the global economic slowdown."

Thailand, the world's top rubber producer and export, has around 160,000 hectares (400,000 acres) of rubber plantations producing around 2.4 million tons of natural rubber each year, of which two million tons are usually exported.

Indonesia informed the meeting that it would start allocating export quotas of 1.23 million tons to exporters from February 1 as part of the plan to cut exports by 10 percent, Prasat said.

Indonesia, the world's second largest rubber exporter, produces around 1.55 million tons a year.

Indonesia has also said it will cut rubber output by 60,000 tons this year.

The three Asian countries have been meeting to find ways to shore up prices since the International Natural Rubber Organization (INRO) collapsed in 1999, but without much success.

Prasat said the meeting selected a new ITRC chairman, but he declined to release the name.

Sources told Reuters Indonesia and Malaysia did not nominate candidates, and Thailand nominated an executive from Teck Bee Hang, a leading exporting firm.

Some Thai bureaucrats preferred Sanit Samosorn, a publisher of The Rubber magazine, who was a director at the Rubber Research Institute of Thailand.

The next ITRC meeting is scheduled for April in Bangkok.