Thailand, Indonesia, Malaysia Agree Moves to Boost Rubber

Thailand, Indonesia and Malaysia, representing about 70 percent of global natural-rubber supply, agreed steps to boost prices, said Yium Tavarolit, chief secretary of the International Rubber Consortium Ltd.

The measures will be announced by ministers tomorrow, said Yium, who declined to give details. Global supply and demand for natural rubber is in balance, with no surplus, he said in an interview after a one-day meeting in Bangkok. State agencies from the three countries and an exporter representative from Thailand participated.

Rubber plunged 43 percent in the past year and reached the lowest in almost three years as growth slowed in China, the top consumer, and Europe. Demand in China may drop 5 percent this year as declining truck sales cut tire use, Hangzhou Zhongce Rubber Co., the biggest tiremaker, said last month. The three producers cut exports by 690,000 metric tons from January to July 2009 to combat a 56 percent decline in prices a year earlier. Rubber surged 103 percent in 2009.

The steps “will have a positive outcome, moving prices higher,” said Yium. China’s imports are still growing, he said. The International Rubber Consortium is an arm of the International Tripartite Rubber Council, which represents growers and exporters from the three countries.

January-delivery rubber gained 0.9 percent to close at 209.5 yen a kilogram ($2,654 a metric ton) on the Tokyo Commodity Exchange after settling yesterday at the lowest level for the most-active contract since October 2009.

Building Stockpiles

Thailand, the top shipper, may raise the budget to buy rubber sheets from local farmers above market rates from the current allocation of 15 billion baht ($476 million) and increase locations for purchases to cover all growing regions, Deputy Farm Minister Nattawut Saikuar said earlier. The plan will be presented for cabinet approval on Aug. 21, he said.

While Thailand is building inventories and cutting aging trees, local rates have fallen 33 percent from this year’s peak to the lowest level since November 2009. The country announced in May plans to buy more than 10,000 tons in Tokyo and Shanghai to boost prices.

Global natural-rubber consumption may rise 2.5 percent to 11.2 million tons in 2012 as output grows 3.2 percent to 11.3 million tons, the International Rubber Study Group said last month. Demand may climb 4.3 percent to 11.7 million tons next year as production gains 4.4 percent to 11.8 million tons.

To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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