World rubber growers, users hold talks in KL

World rubber growers, users hold talks in KL

KUALA LUMPUR (AFP): World rubber producers and consumers
opened talks yesterday amid optimism that differences could be
narrowed here before the conclusion of a new price pact at UN-
brokered talks in Geneva in February.

UN negotiator Peter Lai is attending the two-day semi-annual
council meeting of the International Natural Rubber Organization
(INRO), and says he hopes to wind up protracted negotiations on
the new accord through informal consultations with both sides.

"I am optimistic that the February meeting will successfully
be concluded this time as most of the issues have been resolved,"
said INRO's buffer stock manager James Hegarty.

INRO's members, six producers and 20 consumers, are scheduled
to resume talks in Geneva on February 6 to try hammer out a
successor to the expired 1987 International Natural Rubber
Agreement (INRA), following inconclusive negotiations there in
October.

The 1987 INRA, which succeeded INRA 1979, was extended for 12
months after expiring last year. Members have since agreed to
further stretch the rubber agreement into 1995, pending the
signing of the new pact.

Dissenting views in negotiations on INRA III have been
narrowed to a disagreement over INRO's reference rates, which
guide the buffer stock manager on when to buy or sell stockpiled
rubber to stabilize prices, officials said.

Industry sources said producers have pressed for a five
percent rise in the reference price. But consumers are arguing
that the current level should be maintained in the new accord
since both sides agree that the pact has worked well for the past
14 years in stabilizing the market.

Failure

Analysts said failure to reach an accord in Geneva would mean
the demise of the INRA, one of the few remaining and arguably
more successful international producer-consumer pacts.

Officials said the task of winding up INRO would be easy since
the organization's stockpiles had been depleted as some 200,000
tons of the commodity had been sold in the past months to arrest
a sudden surge in prices.

Malaysia, among the leading producers of rubber, has shown no
keen interest in remaining in INRO if consumers continue
intransigence over producers' demands.

Without a stockpile, INRO has become increasingly ineffective
in light of soaring prices over the past months that are likely
to remain high for most of 1995.

Hegarty himself admitted that there was not much he could do
if prices surge, and conceded continued strong demand would keep
the market buoyant through 1995.

Prices since mid-year have risen by almost 63 percent to an
average of 352 Malaysian cents (140.8 U.S. cents) a kilogram (2.2
pounds) for the SMR 20 grade from 216 cents in January.

Indonesian tire-grade SIR 20 soared to a historic high on
Wednesday amid tight supply, and dealers say they do not think
prices have peaked yet.