Asias top rubber producers are studying the possibility of curtailing exports in 2016 to support prices that have slipped to the lowest in seven years.
The International Tripartite Rubber Council (ITRC), whose members Thailand, Indonesia and Malaysia produce nearly 70 percent of the worlds natural rubber, said late on Thursday they have agreed to immediately begin a study on the implementation of a so-called “agreed export tonnage scheme” for 2016.
The study is due in one month, according to the statement from the ITRC following a ministerial meeting of the group in Jakarta on Thursday. However, the statement did not give details on tonnages or a specific time frame on implementation.
The IRTC decision mimics similar steps taken by other major commodity producers and refiners to curtail production amid large declines across most commodity classes including precious metals, base metals, grains and oil. Chinas top copper smelters have pledged to cut output next year by 350,000 tonnes in an effort to shore up prices.
Rubber futures in Singapore and Tokyo have fallen to their lowest levels in around seven years in 2015, amid slower economic growth in China, the worlds biggest rubber buyer.
Thailand, Indonesia and Malaysia agreed in November 2014 to manage exports though analysts at the time said the step would have little impact on prices without any growth in demand for natural rubber. The three countries agreed in 2012-13 to collectively cut exports by 300,000 tonnes, or roughly 3 percent of 2012 global output. The intervention only briefly supported prices and Indonesia called for the pact to be discontinued.
To address the demand side, the three countries agreed to jointly use up to an additional 300,000 tonnes of natural rubber annually for road construction starting next year, according to the ITRC statement.
In April, leading rubber producers in Asia said they planned to raise prices sharply, ditching a system of pegging them near the benchmark set by the SICOM exchange in Singapore. While rubber futures did climb by 20 percent after they announced the plan, prices collapsed by August to the same level as in April as inventories climbed across Asia.
