PATTAYA, Thailand (May 13, 2016) — Three major natural rubber (NR) producing countries have announced the soft launch of a regional rubber market (RRM), the International Tripartite Rubber Council (ITRC) said on April 29.
ITRC members Thailand, Indonesia and Malaysia said they had selected potential sellers to trade on the platform.
The countries will next invite buyers to register and trade on the platform, said ITRC's operational arm, the International Rubber Consortium (IRCo).
The trade platform is anticipated to be operational by June 2016, IRCo added.
At a meeting of the ITRC, on Dec. 3, 2015 — attended by trade and/or agriculture ministers of the three countries — it was decided that RRM would provide a platform for better price discovery and effective hedging functions.
According to IRCo, 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, said IRCo, is to be established by June 2016, 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 ITRC to immediately start a one-month study for the possibility of implementing a subsequent agreed export tonnage scheme in 2016.
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 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 assessment by global consulting firm LMC, which reported 2 million tons of global NR stock as at end of September 2015.
This report appeared in European Rubber Journal, a United Kingdom-based sister publication of Tire Business.