BANGKOK: The worlds top rubber producing countries, Thailand, Indonesia and Malaysia, will hold an urgent meeting this week to find ways to support prices that have collapsed this month, a senior industry official said on Tuesday.
The price of Thai USS3, a raw material for export grade rubber sheet (RSS3), fell to 90 baht per kg on Tuesday from 95 baht on Monday. That is half the record high of 180 baht hit in mid-February.
Rubber futures on the Tokyo Commodity Exchange (TOCOM), which tend to set global price trends, started falling this month when unrest in the Middle East raised concerns about the global economy and rubber demand. Friday's earthquake in Japan added to these concerns.
"We need to do something this week to stop prices from falling," Yium Tavarolit, acting chief executive of the International Rubber Consortium, told Reuters, adding that the meeting to discuss the measures would probably be held in Thailand.
"We will consider whether we should stop exporting for a while or cut production, as we used to do in the past, to help support prices."
The consortium, which will coordinate the meeting, brings together rubber industry officials, exporters and government officials from the three countries that together account for 70 percent of global rubber output.
Any decision by the IRCo would have to be ratified by the International Tripartite Rubber Corporation, which groups senior government officials from IRCo countries.
TOCOM's benchmark rubber contract for August delivery hit a low of 335.0 yen per kg on Tuesday, 12 percent down from Monday's close of 384.1 yen. At that point it had dropped nearly 40 percent from a record high of 535.7 yen hit in mid-February. The benchmark settled at 353.0 yen per kg.
TOCOM rubber futures had slumped on Monday, leading to a temporary halt in trade, as rumours circulated that some buyers had defaulted on shipments of physical rubber.
Thai RSS3 traded at a four-month low of $4.18-$4.20 per kg on Tuesday, against record-high offers at $6.40 in mid-February. However, there were no reports of shipment cancellations.
When the global economy faced recession in late 2008, the top three rubber producers said they would cut shipments in 2009 to prop up export prices, which had fallen to around $1.50 per kg.
However, the measure was effectively dropped when rubber prices recovered because of strong demand from the tyre industry in China, the world's biggest rubber consumer, and a gradual recovery in the global economy from the second half of 2009.
Thailand, the biggest exporter, may also draw up separate plans to intervene in the domestic market, partly to help the government win farmers' vote in a general election likely by July.
The government would do everything within its means to push the price of USS3 higher, Deputy Prime Minister Suthep Thuagsuban said on Tuesday, urging farmers not to sell at current levels.
"I suggest farmers keep their rubber for a while as the government is pushing prices up very soon, so please wait to sell at 120 baht per kg, not at this low level," he told reporters.
He said the National Rubber Committee would meet next week to issue measures to prop up prices, including buying rubber directly from farmers to be kept in stockpiles.
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