NR intervention price fixed at US$1.4/kg

Sat, 22 May 2010 14:50:50 +0100

The natural rubber intervention price will be raised to US$1.4 per kilogram from US$1.2 per kilogram, thanks to stronger natural rubber price in the international market (Bisnis Indonesia, 22 May 2010).
The agreement was reached at the annual meeting of the natural rubber joint venture established by Thailand, Indonesia, and Malaysia (International Rubber Consortium Limited/IRCo). The meeting was held in Medan on May 19.
Director of International Trade at the Ministry of Trade Gusmardi Bustami, who represents the Indonesian government at the IRCo, revealed that the meeting specifically discussed the 2009 annual report and the 2010 plan.
"The plan for 2010 is to continue what has been decided in 2009 and raise the intervention or defense price,” said Director Gusmardi yesterday.
According to him, the current natural rubber price was good at between US$2.9 per kilogram and more than US$3 per kilogram, leading to an increase in intervention price.
"All this time, rubber price has never hit the fixed level. The price is still higher above the level [US$1.2 per kilogram]," he said.
Gusmardi added the IRCo would also outreach to traditional or big buyers. "We probably need to outreach to big buyers to express our concern related to price."
The meeting also discussed Vietnam’s planned entry to the ITRC (International Tripartite Rubber Council).
According to Gusmardi, the entry of Vietnam into the ITRC was highly expected by the three existing member countries in a bid to better maintain global rubber prices.
However, Vietnam had not yet decided whether it will join the ITRC despite several approaches already made on the senior officer or ministerial level. "I call for more approach to Vietnam.
Bolster consumption
In the meantime, at the ITRC Meeting the three member countries had agreed to make promotion in their countries to bolster natural rubber consumption in their respective countries.
Director of Multilateral Partnership at the Ministry of Trade Sondang Anggraini said by bolstering consumption, natural rubber would be absorbed by the respective domestic industries, which would also create more added value for exported products.
"This is to prevent oversupply. In addition to added value, we can also export our product at a good price."
Another agreement was to conduct a study of the regional market following aspirations from Malaysia, Indonesia, and Thailand that the rubber market should be dominated by the three countries.
"But we are still going to deliberate this. What is certain, we want the natural rubber market to be dominated by the regional players."

Malaysia’s NR output set to increase

Tue, 18 May 2010 15:02:31 +0100

Malaysia's natural rubber (NR) production is expected to increase to 900,000 tonnes this year from 850,000 tonnes last year, boosted by higher prices (Malaysian National News Agency, 18 May 2010).
Plantation Industries and Commodities Minister, Tan Sri Bernard Dompok said the current rubber prices were still good and sustainable.
"There are even part-timers tapping rubber and this shows the industry is still resilient," Dompok told reporters after launching the Malaysian Rubber Industry Strategies and Malaysian Rubber Board Strategies 2010-2020 here today.
At noon, the Malaysian Rubber Board's (MRB) official physical price for tyre-grade SMR 20 was at 871.50 sen per kg compared with 891.5 sen per kg yesterday.
On the shortage of rubber seedlings, Dompok encouraged more nurseries be set up and to learn how to produce them in the fastest way.
Earlier, in his keynote address, Dompok said the NR industry was a major contributor to the country's gross domestic product, export earnings, employment and income generation which benefited at least 300,000 smallholders.
"Last year, the sector contributed more than RM25 billion in revenue and accounted for about five per cent of Malaysia's total export earnings," he said.
However, he said, the contribution should not be taken for granted and it must not be assumed that it would continue to grow.
"If we do not take effective measures, the contributions to the national economy can be easily eroded over time," he said.
Dompok said Malaysia has the potential to become a leading hub for rubber technologies and rubber product manufacturing.
He said the ministry and the MRB had intensified efforts to improve the strength of the NR industry by adopting strategies and action plans to facilitate entrepreneurs to be more daring at innovation, enhancing productivity and efficiency.
"One of the action plans is to develop a strong network between the private and public sector rubber-related organisations.
"Through this network, research and development (R&D) support can provide the extra edge to Malaysian rubber manufacturers to increase their productivity, efficiency and market acceptance.
"It is also to enhance their technological advantage over their competitors," he said.
He said as the world trends and consumer preferences changed, R&D must be market-oriented to ensure that Malaysian rubber product manufacturers were operating in tandem with the market demands and technological advances.
Dompok said the upstream rubber sector may not be able to produce sufficient latex concentrate to meet the demand of the domestic downstream industries due to the reluctance of the smallholders to produce it.
"However, if we can improve the logistics support for the production of latex and help increase yield, I think we can still maintain some of our competitiveness," he said.
He said MRB should work together with other rubber-related agencies to ensure a more efficient and effective transfer of technologies to increase the yield from the current 1.4 tonnes per hectare per year to 1.8 tonnes by 2020.
Meanwhile, he said, the downstream rubber industry was too narrow-based with almost 80 per cent of exports consisting of latex-dipped rubber goods.
"To take up the challenge, the NR industry must venture into new sources of growth.
"To be able to diversify the product base, MRB should have the capacity and capability not only to formulate new materials to meet the challenging demands of new rubber products but also to design and re-engineer rubber-based products," he said.

Vietnam faces shortage of rubber latex

Mon, 10 May 2010 17:14:00 +0100

Vietnam's rubber industry is suffering from a shortage of latex, which has driven up the export price, experts have said (Asia Pulse, 10 May 2010).
Statistics from the Ministry of Agriculture and Rural Development show that rubber exports in the first four months of the year reached 173,000 tonnes, worth US$445 million - 23.8 per cent higher than the same period last year in terms of quantity.
Export prices jumped to US$2,650 per tonne, an increase of 92 per cent over the same period last year.
Tran Thuy Hoa, general secretary of the Vietnam Rubber Association (VRA), said rubber prices have increased markedly against last year, bringing higher profits to producers.
"However, the level is well below the highest price of US$3,000 per tonne in 2008," Hoa said.
She added that price rises are due to the recovery of the global economy, especially in industrial production.
"In addition, increasing domestic rubber consumption has also contributed to higher prices," she said.
She added demand is driven by new tyre-making factories, including the Republic of Korea's Kumho Tyre Plant in southern Binh Duong province, which produces 3 million light lorry tyres a year. Other factories typically required about 80,000 tonnes of rubber to make 4.45 million tyres.
"Domestic rubber consumption last year was 120,000 tonnes, accounting for 16.6 per cent of the country's total natural rubber production. This year, it is expected to be 25 to 30 per cent," she said, adding that demand would increase continuously up to 2019.
Head of the Ministry of Agriculture and Rural Development's Agro-Forestry Product Processing and Salt Industry Department Le Xuan said rubber exports this year would be good but that productivity would just marginally exceed that of last year due to the dry weather.
"The industry, therefore, will barely be able to reach its export target of 780,000 tonnes of rubber this year," Xuan said.
The ministry plans to plant an additional 40,000ha of rubber trees - capable of producing 770,000 tonnes - this year, increasing the country's rubber plantation area to 715,000ha.
The failure to meet demand has pushed up the price of products made of rubber such as tyres and mattresses by 5 per cent to 15 per cent.

China to sell rubber from its reserve

Mon, 19 Apr 2010 14:32:25 +0100

China will sell another 30,000 tonnes of natural rubber from its reserves on 23 April 2010, after having sold 30,000 tonnes on 14 April 2010, according to an announcement made by the State Reserve Bureau (Asia Pulse, 19 April 2010).
This is seen as furthering the earlier move by the Chinese government to mitigate the current high rubber prices and pressure from tight supplies domestically and from the Southeast Asian producing countries which are now experiencing low production due to the seasonal dry wintering.
China imported 300,000 tons of natural rubber worth US $ 758.092 million for the first two month of 2010, which was 6 percent more, year on year.
Latest data from the General Administration of Customs indicated that China’s natural rubber import for March 2010 was 190,000 tonnes, 46.15 percent more than the 130,000 tonnes imported in February.

Drought playing havoc in China

Thu, 1 Apr 2010 14:37:04 +0100

The continuing severe drought is playing havoc in the second largest rubber growing region of China, the largest natural rubber importer (Irco, 1 April 2010).
Rubber plantations in Xishuangbanna, Yunnan, in the south western region of China, are reported to have been ravaged by powdery mildew, a disease wherein rubber trees shed leaves and latex production slows. So much so that farmers fear that output this year could plunge nearly 30 percent.
Xishuangbanna, the second largest rubber growing area after Hainan province in China, has 246,000 hectares of rubber trees and the cash crop provides much of the income for local farmers.
There are around 30 private rubber manufacturers here and most of them have ceased production, as processing the raw rubber requires huge quantities of water.
The shortfall in output has resulted in losses of over US $ 26.37 million for the region as of March, claimed local government officials.
With drought playing havoc in the growing regions, China, which is the largest natural rubber importer in the world, has no other choice but to increase its import of the commodity from abroad. This is evident by statistics released which showed a surge of 63 percent in China’s imports of natural rubber for the first two months of this year.