Malaysia proposes NR bloc to stabilise prices

ERJ staff report (RD)

Kuala Lumpur, Malaysia -- Malaysia has proposed creating a regional bloc-based in Kuala Lumpur and including neighbours Indonesia, Thailand and Vietnam -- to stabilise global natural rubber prices and assure steady NR supplies, according to various reports.

The plan will be called the International Rubber Market, said Hamzah Zainudin, Malaysian deputy plantation and commodities minister, at a press conference in Kuala Lumpur.

Hamzah blamed excessive speculation on the Tokyo Commodities Exchange and elsewhere for distorting NR prices and necessitating the formation of a new market mechanism.

Natural rubber prices hit an all-time low of about $1.10 per kilogram during the second half of 2008, but rebounded strongly in 2009 and now hover around the $3 mark. The price of Standard Malaysian Rubber 20 stood at about $2.88 per kilo in Kuala Lumpur 18 June.

Aside from the participation of Vietnam, there was no word on how the International Rubber Market would differ from the International Rubber Consortium, which Malaysia, Indonesia and Thailand -- the world's three largest natural rubber producers -- founded in 2002 to control both NR production and prices. The top three rubber producers account for about 75 percent of the world NR market, and Vietnam for about 9 percent.

The plan is still in its infancy, and no details are available, noted one industry source who asked to remain anonymous. “But I'm skeptical about their ability to execute the plan across multiple regions and currencies,” the source said.

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Rubber and Plastics News (a Crain publication)