Top NR producers unite to boost prices.

Thailand, Indonesia and Malaysia have signed an agreement to cooperate in measures aimed at increasing the price of natural rubber. The three countries have agreed to cut production 4% a year beginning in 2002. The countries will replace rubber trees with oil palms and other crops and will also form a company that will buy and stockpile rubber. The company, Tripartite Rubber Corp., will also help the three governments fix production targets.

The three countries account for nearly 70% of worldwide natural rubber production, according to the International Rubber Study Group. Since the collapse of the International Natural Rubber Agreement in 1999, Thailand, Indonesia and Malaysia have been discussing the need for a joint effort to boost sagging NR prices. IRSG figures show that prices for a kilo of NR reached 371.9 Malaysian/Singapore cents in 1995, and in May it was 127 Mcents/kg. The price of NR seems to have bottomed out in February at 100.6 Mcents/kg.

[GRAPH OMITTED]

Top NR producing countries

                 1999    2000    2001

Thailand        2,140   2,200   2,150
Indonesia       1,599   1,571   1,602
Malaysia          769     700     730
India             620     635     650
China             460     470     480
Vietnam           230     255     275
Cote d'Ivoire     120     125     130
Sri Lanka          97      95      95
Liberia            85      92      99
Brazil             70      72      75
Philippines        65      67      68
Cameroon           60      62      65
Nigeria            58      60      60

Figures in thousands of metric tons
2000 figures estimated
2001 figures forecast

Claude Bedard of Safic Alcan, in an interview by Reuters, said they believe that prices have bottomed out but will not rise significantly over the next few years. The Paris-based trading firm expects flat demand in North America and Europe. He said that several buyers have bought rubber for shipment in 2002 expecting prices have hit bottom. He said some American buyers have bought up to 40% of their annual needs for next year.

Ministers from the three nations said their governments were committed to making the pact work, as all three have tried schemes within their own countries to boost prices. Malaysia's Primary Industry Minister Dr. Lim Keng Yaik said, "Inter-governmental efforts to boost the rubber price in the past year have had little success as producers failed to stop planters tapping more rubber and the global economic slowdown sapped demand from users. It's time the three countries start closer cooperation to boost prices. We have been bullied by buyers and tire makers for too long."

Dr. Lim said that production control, buffer stocking and the formation of sellers consortiums were the keys to boosting prices. The ministers appointed a team to prepare the details as to where Tripartite Rubber will be located and when they will begin buying rubber.