* No signs IRCo will intervene on prices, Thai crisis hurts
* Physical prices near five-year lows
* IRCo’s call to limit sales falls on deaf ears
By Lewa Pardomuan
SINGAPORE, May 9 (Reuters) – The world’s biggest rubberproducing region has insufficient funds to intervene in themarket to stem a price slide that has pushed rubber futures tomulti-year lows, Asian officials and traders said.
Tokyo rubber futures have plunged more than 25percent this year, hovering near their lowest in more than fouryears, while physical prices on Singapore’s SICOM arelanguishing near five-year lows.
Market confidence has been dented by a weaker economicoutlook in top market China and swelling global inventories,while top producer Thailand has announced plans to sell 200,000tonnes from its stockpiles.
The International Rubber Consortium (IRCo) groupingThailand, Indonesia and Malaysia – who together account for morethan 70 percent of global natural rubber output – appearshamstrung by a lack of cash and political will.
“There aren’t many options on the table. The three countrieshave to pump money into IRCo to do the stock management. It willrun into billions, so it is not feasible at this juncture,” saida source at the Malaysian government.
“Thailand’s government is in caretaker mode, Indonesia is inelection mode. I don’t think anything will move now. These arethe two major players that have to call the shots,” said theofficial, who declined to be identified due to the sensitivityof the issue.
Indonesian officials suggested that Thailand should take thelead in any proposal, but the ousting of Prime Minister YingluckShinawatra has deepened the country’s six-month long politicalcrisis.
“I am not blaming Thailand, but it is the biggest rubberproducer. Funding has become a problem because Thailand can’tgive its commitment when the government is in a transition,”said Indonesia’s trade minister Muhammad Lutfi.
Indonesia on Friday suggested IRCo could be expanded toinclude other rubber producing countries such as Vietnam,Cambodia, Laos and Myanmar.
Tools available to the alliance include curbing exports,reducing tapping by farmers or buying rubber for stockpiling andsale at a later date.
Traders say the alliance has been undermined by a lack oftrust among its members, as well as a lack of funds, and itsmost recent call to limit sales at current prices has fallen ondeaf ears.
The three nations last acted in 2012-13 when they agreed toremove 300,000 tonnes, or 3 percent of 2012 global output, fromthe export market.
However, the intervention only briefly supported prices andIndonesia publicly called for the pact to be discontinued.
Dealers said the current situation was more severe.
Global natural rubber stocks are estimated to rise about 10percent to 3.21 million tonnes at end-2014, according to figuresfrom the International Rubber Study Group, about 27 percent ofglobal output.
Stocks in Thailand, Indonesia and Malaysia are estimated bythe Association of Natural Rubber Producing Countries at about715,000 tonnes.
“The only thing that can stop the slide is for world stocksto get depleted and demand starting to outstrip supply,” said adealer in Singapore.
(With reporting by Apornrath Phoonphongphiphat in Bangkok,Anuradha Raghu in Kuala Lumpur and Yayat Supriatna in Jakarta)
– Reuters
