FAR EAST: Thailand, Indonesia and Malaysia to cut rubber exports from March

Thailand, Indonesia and Malaysia agreed to cut shipments of natural rubber by 615,000 tons for six months from March to reduce supplies and boost prices that are trading near six-year lows.

The three countries, which account for more than 60 % of global output, plan to curb exports for six months, Chao Songarvut, the acting governor of the Rubber Authority of Thailand, said 4 Feb 2016, adding that Thailand will account for about a half of the total cuts.

In a joint statement, the three countries said that the move was to address a decline in rubber prices which has had "a direct effect on the income of rubber smallholders in our three countries." Thailand will cut exports by 324,000 tons, Indonesia by 238,740 tons and Malaysia by 52,260 tons, according to a statement from the International Tripartite Rubber Council (ITRC), which groups the three producers. The total cuts account for nearly 6 % of global natural rubber output.

"The three countries' ministers believe that cutting exports and boosting domestic use of rubber will drive up prices and fix the price slump, making prices fair for rubber farmers," Thailand's agriculture ministry said in a statement. Besides cutting exports, the three countries also agreed to increase domestic consumption of rubber, including for road and railway construction. "We are optimistic with joint implementation of these measures, rubber price will recover and continue to be fair and remunerative to all smallholders and other stakeholders in the natural rubber industry," the ITRC said in the statement.

In December, the three countries had expressed concern about the slump in prices, which fell to below production costs, causing farmers to switch to other activities, according to a joint statement after ministerial meeting. They pledged to maintain supply-demand balance of natural rubber and planned to form a regional rubber market for better price transparency.

Thailand subsequently moved to support prices by agreeing to buy rubber from growers at above market prices last month. Previous efforts by major rubber producers to cut exports or output have only had a fleeting impact on prices amid a slowdown in top rubber importer China. In 2014, the ITRC members also agreed to cut exports to curb excess supply. Before that, they collectively cut shipments by 300,000 tons in 2012-13, or roughly 3 % of 2012 global output. The intervention only briefly supported prices and Indonesia called for the pact to be discontinued.

Source: Daily “The Bangkok Post”, Bangkok; 4 Feb 2016
(Syed Rashid Ali, Karachi, Pakistan)