Rubber: Major producing countries to introduce support price?

Commodities , Rubber Jul 04, 2012 No Comments

Rubber treeIndonesia, the world’s second-largest natural rubber producer, is considering introducing a minimum price under an agreement with other major Southeast Asian producers Thailand and Malaysia, to avert a further decline in the commodity’s price in the crisis-hit global markets.

The three countries, whose natural rubber production accounts for 70 per cent of global output, might jointly limit exports and set an export quota for natural rubber which fell 25% in four months on the Tokyo Commodity Exchange (TOCOM).

A joint effort to cut sales through a tripartite agreement in 2009 by the Southeast Asian producers proved effective in maintaining prices at that time.

Asril Sutan Amir, chairman of the Indonesian Rubber Association (Gapkindo), said the minimum price should be set at about $4 per kg. The three producers also need to plan supply management, agree on export quantities and reduce tapping frequency. The three countries should apply all of these measures instead of just a single measure to make the joint efforts more effective, according to Amir.

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Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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