Thailand, Indonesia, Malaysia to Cut Rubber Exports

By Yoga Rusmana and Naila Firdausi

Dec. 13 (Bloomberg) -- Thailand, Indonesia and Malaysia, the world's three biggest natural rubber producers, plan to reduce rubber shipments next year to help revive prices.

The three countries agreed to cut rubber exports by a combined 700,000 metric tons next year, or a tenth of their annual harvest, said Nurmala Abdul Rahim, Malaysia's deputy secretary general at the Ministry of Plantation Industries and Commodities in Bogor, Indonesia.

The producers are discussing steps after rubber prices in Tokyo tumbled 70 percent since reaching a 28-year high in June on slowing demand. Thailand, Indonesia and Malaysia in October agreed to jointly reduce output by 215,000 tons next year by felling trees.

``With immediate implementations, we hope price of natural rubber will improve,'' Abdul Rahim said. The export limitation and output cut may reduce the global market supply by as much as 915,000 tons next year, she said.

Futures for May delivery in Tokyo slipped 3.8 percent to 105.8 yen ($1.16) a kilogram yesterday after the U.S. Senate rejected a bailout plan for U.S. automakers, heightening concern demand for car tires will decline. Prices reached a six-year low of 99.8 yen on Dec. 5 after touching a 28-year high of 356.9 yen on June 30.

The three countries last year harvested about 7 million tons of rubber and exported a combined 5.5 million tons, according to the tripartite rubber council.

Defaults

Rubber associations of Thailand and Malaysia also agreed to tell its members not to ship natural rubber at below $1.35 a kilogram, following Indonesia's plan, Abdul Rahim said.

The tripartite rubber council also called for the three governments to talk with counterparts at importing countries to help prevent buyers from defaulting on orders, Abdul Rahim said. Out of disputes for 300,000 metric tons of rubber between overseas buyers and exporters from Indonesia, Thailand and Malaysia, 200,000 tons have now been settled, she said.

``The recent drastic decline of natural rubber prices was aggravated by non-fulfillment of contracts,'' Abdul Rahim said.

The three rubber-producing nations plan to hold a ministerial meeting on rubber in Kuala Lumpur in January to adopt measures including on reference price and assistance to small- scale plantation owners.

To contact the reporters on this story: Naila Firdausi in Jakarta at nfirdausi@bloomberg.net; Yoga Rusmana in Jakarta at yrusmana@bloomberg.net.