BANGKOK—In the latest of several historical attempts to shore up low natural rubber prices, the three largest NR-producing countries have agreed to cut back rubber exports by 350,000 metric tons in the first three months of 2018.
The Royal Thai Embassy announced the agreement between Thailand, Indonesia and Malaysia in a Jan. 24 press release.
Thailand's actions under the agreement are governed under that nation's Rubber Control Act, according to the press release.
Indonesia's part of the agreement are co-implemented by the Ministry of Trade of Indonesia and GAPKINDO, the Indonesian rubber industry organization. Malaysia is administrating its portion through the Malaysian Rubber Board, under the Rubber Price Stabilization Act of 1975, the release said.
Each country was assessed cutbacks in relation to its NR production, according to the release. As the world's largest producer, Thailand was assessed the largest share, the embassy said—234,810 metric tons.
In addition to cutting back exports, all three countries are implementing plans to increase domestic NR consumption, the release said.
Thailand, for example, is appropriating an extra 200,000 metric tons for government use in such products as rubberized asphalt, sports field mats, pavement rubber blocks, pond liners, rubber pillows and rubber mattresses, it said.
Programs to stabilize NR prices in Southeast Asia date back as least as far as the International Natural Rubber Agreement, which began in the 1980s and ended in 1999. In 2001, Thailand, Indonesia and Malaysia signed an agreement to restrict NR production through 2003.
Earlier agreements had little effect on prices, but the latest cutback program is raising prices, especially in Rubber Smoked Sheets 3, according to an industry source who asked to remain anonymous.
Unlike previous cutback programs, which simply created export restrictions, the new scheme actually allocates rubber to various buyers.
"This isn't a 'please be advised' situation," the source said. "This is, 'Company ABC can expect XYZ.' They have assigned targeted levels of shipments."
Replying to written questions, the Rubber Authority of Thailand said it expects the cutback to have an especially strong effect after the Chinese New Year, when China will increase its purchases of NR.
Thailand, Indonesia and Malaysia have instituted NR production cutbacks four times since 2001, RAOT said. While the effectiveness of cutbacks have varied, the last cutback in 2016 raised prices 72.3 percent over a three-month period, and then prices slowed down afterward, it said.
Source : Rubber& Plastic News