Rubber producers cut output with new AETS

ERJ staff report (RD)

Bogor, Indonesia - The 14th International Tripartite Rubber Council (ITRC) Meeting has seen the world's top three rubber producers, Thailand, Indonesia and Malaysia, agree to cut combined rubber export by 915 000 tonnes in 2009. The policy is designed to boost the falling rubber price. it will be managed under a new AETS (Agreed Export Tonnage Scheme). The producing countries met in Indonesia over the weekend and issued a statement on Saturday.

To be implemented as of 1 Jan 2009, the AETS will cut rubber export from all three countries by 700 000 tonnes and a further 215 000 tonnes due to “accelerated replanting under the SMS (Supply Management Scheme),” the ITRC said 13 Dec.

The ITRC said for the first quarter of 2009 export will be cut by 270 000 tonnes with the rest of the quota being cut in subsequent quarters. It also said that many rubber associations such as GAPKINDO and Thai Rubber Association (TRA) are urging members not to sell below US$1.35/kg (Euro 1.05).

The Indonesian Rubber Association GAPKINDO said it has urged its members, "not to sell below US$1.35/kg." The IRCo statement said both the Thai Rubber Association (TRA) and Federation of Rubber Trade Associations of Malaysia (FRTAM) are adopting similar measure.

IRCo said traders who defaulted on rubber futures contracts had been a major contributor to the decline in prices in recent months. It urged both buyers and sellers, "to resolve any non-fulfilled outstanding contracts urgently so that the international rubber trade can continue to operate orderly for long-term mutual benefit." The ITRC agreed that the three countries' governments would, "approach the contractual parties' respective governments to help curb these unhealthy practices."

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Press release from IRCO