Jakarta – Major natural rubber producers, Thailand, Malaysia and Indonesia, have agreed to open a regional rubber market (RRM) by June 2016, or earlier.
At a meeting of the International Tripartite Rubber Council (ITRC) on 3 Dec, 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 a media 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, said IRCo, is to be established by June 2016, but the three minister 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 (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 tonnes compared with 3.2 million tonnes in 2014.
This is significantly higher than an assesment by global consulting firm LMC, which reported 2 million tonnes of global NR stock as at end of September 2015.
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 tonnes of natural rubber annually for road construction starting in 2016.