Rubber exporters from Thailand, the world's largest producer, have started purchases on the Tokyo and Shanghai exchanges to shore up prices of the commodity used in tyres and gloves, according to the Thai Rubber Association.
"Exporters have bought the rubber on the exchanges as it is cheap," president Prapas Euanontat said by phone from the southern province of Nakhon Si Thammarat. He declined to specify the amount. Shippers will continue buying on overseas bourses "until local prices climb to 120 baht (US$3.80) a kilogramme, the level the government would like to see."
Futures have plunged 51 per cent from a record in February 2011, cutting costs for tyre makers such as Bridgestone Corp, Goodyear Tire & Rubber Co and Michelin & Cie.
Prices slumped as China, the biggest user, expanded last quarter at its slowest pace in almost three years and Europe struggled to contain its debt crisis. Chinese vehicle sales dropped 1.3 per cent in the first four months, the worst performance since 1998, according to the China Association of Automobile Manufacturers.
Thailand announced plans last week to buy more than 10,000 metric tonnes in Tokyo and Shanghai and to continue purchases from local farmers at above-market rates to drive prices higher. The country will also work with Indonesia and Malaysia to tackle the slump, according to Deputy Farm Minister Nattawut Saikuar. The three nations represent about 70 per cent of global supply.
"At current prices, producers in Malaysia and Indonesia don't want to plant new trees," said Pongsak Kerdvongbundit, the group's honorary president. "Currently there is no shortage. But when the world economy recovers there won't be extra supply to fill any gap," he said on Wednesday on the sidelines of the 2012 World Rubber Summit here.
Rubber for delivery in October lost as much as 3.9 per cent to 259.1 yen a kilogramme (US$3,261 a tonne), the lowest for the most active contract since January 5, on the Tokyo Commodity Exchange.
Global natural rubber consumption is set to expand 3.4 per cent to 11.3 million tonnes this year, while production climbs 3.2 per cent also to 11.3 million tonnes, the International Rubber Study Group said. Bloomberg
Source: www.btimes.com.my
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