Indonesian supplies are 30 cents a kilogramme cheaper than those from Thailand and 15 cents cheaper than Malaysia, Pongsak Kerdvongbundit, honorary president of the Thai Rubber Association, said in an interview in Phuket, Thailand. “The price difference currently is too wide and unstable.”
Futures in Tokyo plunged into a bear market this month on signs weak demand in China, the largest consumer, will expand a global glut. The top producers, which represent about 70 per cent of world output, will conclude a three-day meeting in Phuket today on measures to boost prices, including an extension of export cuts. Thailand, the largest producer, plans to lower shipments by 10 per cent through end of May, Deputy Farm Minister Yuttapong Charasathien said yesterday.
A suitable range should be set “to avoid undercutting each other on prices and lowering export income,” Pongsak said. “We had informal talks with Indonesian and Malaysian exporters and will further discuss” at the next meeting of the Asean Rubber Business Council and during the Thai Rubber Association annual
meeting, both in May, he said. The council represents Southeast Asian producers and exporters.
Futures traded at 277.5 yen a kilogramme (US$2,790 a metric tonne) today on the Tokyo Commodity Exchange, the global benchmark. Prices are down 8.3 per cent this year after rallying 15 per cent in 2012 when the three countries agreed to restrict shipments from October to March and cut down trees, targeting to remove a total of 450,000 tonnes from the market after futures slumped to a three-year low in August.
Thai exporters have been buying rubber from Tokyo where prices are cheaper, said Pongsak. “Purchases will continue as long as Tokyo prices are lower than that of Thailand’s.”
Thai rubber free-on-board climbed 1.2 per cent to 83.25 baht (US$2.87) a kilogramme yesterday, according to the Rubber Research Institute of Thailand.
World reserves are poised to advance to the highest level in 13 years as production exceeds demand through next year, according to London-based industry adviser The Rubber Economist. Reserves will total 2.17 million tonnes in 2014, the highest level since 2001, managing director Prachaya Jumpasut said April 10.
Inventories in Qingdao, China’s main import hub, reached a record 358,300 tonnes by March 15, Cai Zhiwei, general manager at the Qingdao International Rubber Exchange Market, said March 22. The country accounts for 34 per cent of global demand, according to International Rubber Study Group.– Bloomberg