Thailand, Indonesia, Malaysia and Vietnam were among countries that agreed to refrain from selling natural rubber below current prices, according to the International Rubber Consortium (IRCo).
Cambodia, the Philippines and Papua New Guinea also pledged to join efforts by producers to improve prices to prevent small holders from suffering further losses, the group said on its web site. It follows a move by trade groups from five Southeast Asian nations, which account for at least 70 percent of the global production, on October 10 to halt sales below current rates.
Rubber prices from Tokyo to Thailand and Singapore slumped to their lowest levels in more than five years this month, after concerns mounted that demand from China would weaken as the economy in the top consuming nation slowed. Futures in Tokyo rallied by the most in almost five months today on expectation the measures may help pare a global surplus.
“We need to assess the situation whether more measures are needed,” Yium Tavarolit, the consortium’s chief executive officer, said by phone from Kuala Lumpur. “Actually, the rubber market doesn’t have much of excess supply.” The contract for delivery in March on the Tokyo Commodity Exchange climbed 3.1 percent, the biggest increase at close for a most-active contract since May 19, to ¥184.2 a kilogram ($1,722 a ton). Futures tumbled to ¥173.8 on October 3, the lowest since July 2009. Export rates in Thailand on October 2 fell to 49.20 baht a kilogram ($1,513 a ton), the lowest since 2008, before climbing 1.5 percent to 51.45 baht on Tuesday.
The agreement among producers “would prevent the rubber smallholders from suffering from further losses as the current price is lower than the cost of production,” IRCo said.
The International Tripartite Rubber Council, which represents government officials, growers and exporters from Thailand, Indonesia and Malaysia, plans to advance a meeting to early November from December to tackle the price slump urgently, Malaysia’s Plantation Industries and Commodities Minister Douglas Uggah Embas said on Tuesday.
The council wants to reduce supplies through long-term new planting and replanting programs, and increase demand for rubber in road construction, according to a ministry statement.