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A farmer collects latex in a rubber plantation In North Sumatra. (Photo: Y.T Haryono, Reuters)

Regional Rubber-Producing Countries Suspend Curb on Exports

Indonesia, Thailand and Malaysia, the world’s biggest rubber producers, have suspended a reduction in exports as the global economic recovery stokes demand for the commodity used in tires and gloves, a producers’ group said.

The three nations, which harvest about 7 million metric tons a year, cut exports by 690,000 tons in the January-July period, approaching the 700,000 ton target set in December, to combat a 56 percent slump in prices last year.

“We have put this program on hold,” Abdul Rasip Latiff, chief executive officer of the International Rubber Consortium, said on Tuesday. “We’ll review it and act according to the outlook.”

Restoring exports may cool rubber prices that have jumped 70 percent this year on speculation rising crude oil prices and growth in China may push up demand. China’s economy grew last quarter at the fastest pace in a year, and oil reached $82 a barrel last week, making rubber more attractive than rival synthetic products made from petroleum.

“The freeze in export cuts, at a time when new supply will arrive later this month, may have a psychological effect,” said Rewat Yenchai, an analyst at Agrow Enterprise in Bangkok. “This may put downward pressure on prices in the near term.”

March-delivery rubber lost 0.1 percent to settle at 230.5 yen ($2.50) a kilogram on the Tokyo Commodity Exchange, down from a one-year high of 235.7 yen on Friday.

Global rubber consumption will rise by as much as 5 percent next year, aided by demand from China, India, Brazil and Russia, Latiff said. Supply will rise to meet requirements.

“We’ll make sure that production will balance with demand so farmers get good prices,” he said. IRCO, which represents growers and exporters, stabilizes prices by managing supplies of the commodity.

China’s gross domestic product expanded 8.9 percent in the third quarter, the statistics bureau said. The country’s economy expanded as stimulus spending and record lending growth helped the nation lead the world out of recession. Car sales in September surged 78 percent to 1.33 million units, the China Association of Automobile Manufacturers said on Oct. 13.

Thailand exported 1.44 million tons in the January-July period, Indonesia sold 1.16 million tons and Malaysia shipped 369,900 tons, according to the Association of Natural Rubber Producing Countries. The countries may export a combined 5.51 million tons this year, the group said.

Heavy rain in Thailand’s southern provinces, a key area for rubber plantations, and expected dry weather early next year may hurt production, Yium Tavarolit, an economist at IRCO, said on Tuesday.

“If weather conditions get worse, supply shortages could happen,” he said. “Rubber prices have improved in the second half of this year and this will continue next year,” he said. Prices may stay above $2 a kilogram until the first quarter of next year, he said



Bloomberg

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