Rubber producers say the price of local rubber has declined again, blaming a slowdown in the global economy and less demand for rubber.
Men Sopheak, the secretary-general of the Association for Rubber Development in Cambodia, said in the last month the rubber price increased, but now it was in decline again.
“It increased to $1,500 per ton in April because it was the time we stopped collecting rubber and the amounts of rubber on the market were limited and demand increased and boosted the price,” Mr. Sopheak said.
“But now the rubber price has declined to about $1,200 per ton, due to the global economy slowing down and China, which is the biggest market for rubber, has decreased its rubber imports. Rubber farmers have returned to harvest and that pushes the supply up after some rain.”
Thailand, Indonesia and Malaysia supply about 70 percent of rubber to the global market. The three major suppliers – Malaysia, Indonesia and Thailand – recently agreed to cut the rubber supply in the market for three months, Mr. Sopheak said.
“If they can do this and have a clear mechanism to implement their pledge, we hope it will make the price of rubber recover. When the supply in the market declines and demand increases, it helps boost the price,” Mr. Sopheak said.
“The main market is China – the biggest in the world – but we sell only to merchants in Indonesia, Myanmar and Thailand,” Mr. Sopheak said.
In 2014 Indonesia, one of the biggest rubber producers, called for producers not to sell rubber below $1,500 because the production cost was about $1,500 per ton, so producers could not make any profit, said Mr. Sopheak.
The price of rubber was about $1,030 per ton early this year, but in 2014 the price was from $1,700 to $1,800 per ton, while global rubber prices have been near their lowest levels since 2009 due to oversupply and declining demand from China, industry experts have said.
Following the sharp decline in the price of rubber, the government said it was considering suspending the $50 per ton export duty on the commodity after lobbying by local producers, who say they are operating at a loss, Agriculture Ministry secretary of state Eang Sophalleth told Khmer Times recently.
Mr. Sophalleth said officials at his ministry were drafting a report for the Cabinet and that action could be taken within a week.
“The ministry is studying this in detail and will submit a report to [the Cabinet] to take action,” he said.
Mr. Sopheak said the government levies $50 in tax duty per ton of rubber exported if the price is from $1,000 to $2,000 and $100 of tax duty per ton of rubber if the export price is above $2,000. It takes zero tax if the price is below $1,000.
“It is good, yet the production cost is higher than the current export price, so the government should help the producers by lowering the export tax,” he said.
Total global rubber production has been estimated at about 12.5 million tons.
Rubber plantations across the country cover about 380,000 hectares, while half of the plantations belong to family businesses and the other half belongs to rubber processing companies, according to Mr. Sopheak.
