Vietnam is backing efforts by other major rubber producers to support prices by curbing output and exports, said a senior official from an arm of an organization that controls 70% of the world’s natural rubber production.
Vietnamese officials last week indicated their willingness to consider imposing export curbs, Yium Tavarolit, chief secretary of the International Rubber Consortium, said Thursday on the sidelines of an industry event. The consortium is an arm of the International Tripartite Rubber Council, which comprises Thailand, Indonesia and Malaysia, the world’s three biggest natural rubber producers. Vietnam is the fourth biggest.
Officials from the relevant Vietnamese government departments couldn’t immediately be reached to comment.
The ITRC agreed in August to collectively cut rubber exports by a combined 300,000 tons over six months beginning Oct. 1, following a sharp drop in prices.
Mr. Tavarolit rejected media reports that the curbs would only kick in when physical rubber prices fell below $2.70 a kilogram.
“The curbs have started…it isn’t possible to wait for prices to fall to a certain level and take action,” he said.
Under the planned export curbs, Thailand will cut back shipments by about 150,000 metric tons, Malaysia by about 39,000-40,000 tons and Indonesia by around 100,000 tons.
The export and production curbs have lifted prices of the bellwether rubber contract on the Tokyo Commodity Exchange by 20%-30% from August, when they were at 205.6 yen ($2.63) a kilogram, the lowest in almost three years.
But prices of the commodity are still down 40% from a high of Y344.4 a kilogram in February. Commodity prices have fallen as growth in China and Europe has slowed.
The benchmark March contract settled Y3.4 lower at Y266 a kilogram Thursday.
Mr. Tavarolit said Vietnam has agreed to participate in the ITRC’s December meeting, amid expectations that the country could soon join the group.
With Vietnam as a member, the ITRC would account for around 80% of global production.
Source: Dow Jones
