By Shahrzad Pourriahi, Crain News Service
JAKARTA, Indonesia (Dec. 9, 2015) — Natural rubber (NR) producers in Thailand, Malaysia and Indonesia have agreed to open a regional rubber market (RRM) by June 2016 at the latest.
At a meeting of the International Tripartite Rubber Council (ITRC) on Dec. 3 in Jakarta, trade and/or agriculture ministers of the three countries decided that RRM would “provide a platform for better price discovery and effective hedging functions.”
According to a news release by the International Rubber Consortium (IRCo) — the operational arm of ITRC — two technical working groups have been established to accelerate the drafting of related bye-laws and exchange rules and regulations including technical specifications and arbitration resolution procedures.
The RRM is to be established by June 2016, IRCo said, but the three ministers have urged ITRC/IRCo “to expedite the establishment to be within three months to the extent possible.”
The ministers also tasked the ITRC to start a one-month study for the possibility of implementing a subsequent agreed export tonnage scheme (AETS) in 2016.
The press release did not give further details on the scheme.
The meeting was held as rubber prices are in a multi-year low and, according to ITRC, below the cost of production despite declining global NR stock and production.
It was reported by the International Rubber Study Group (IRSG) that global NR stock in September 2015 was 2.8 million tons compared with 3.2 million tons in 2014.
This is significantly higher than an assesment by global consulting firm LMC, which reported 2 million metric tons of global NR stock as of September.
Among other topics discussed by the ministers was the commitment of Vietnam to join ITRC.
While it has not been officially confirmed, Vietnam and ITRC members have announced, on various occasions, Hanoi's interest in becoming a strategic partner in ITRC.
Domestic rubber consumption among the three countries was also highlighted, with the states agreeing to use up to an additional 300,000 tons of NR annually for road construction starting in 2016.
This report appeared in European Rubber Journal, a United Kingdom-based sister publication of Tire Business.