Malaysia, Indonesia and Thailand co-operate to increase global rubber prices

The major natural rubber (NR) producers are taking further step ahead to increase the global rubber prices in the coming top producers’ ministerial meeting in Kuala Lumpur this week. Malaysia producing approximately one million tones of rubber yearly is the world’s third largest NR producer. Malaysia is taking a drastic step to reduce rubber exports as well as production and to increase replanting activities.


A source with rubber conglomerate said that Malaysia will only set a fixed floor price for rubber if the price of Standard Malaysia Rubber 20 drops to RM2 to RM2.50 for a kilo. The source also said that there are no immediate need to set the floor price as the current price is at RM5 per kilo. Member countries of International Rubber Consortium (IRCo) that consists of Malaysia, Indonesia and Thailand accounts for more than 70% of the world’s total rubber production.


These three countries planned to set the price for rubber at RM4.87 per kilo. Thailand as the world’s largest NR producer has agreed to store 200,000 tonnes of rubber from February to stabilize rubber prices. Datuk Peter Chin, Minister of Plantation Industries and Commodities said that Malaysia would not follow the action of stockpiling again due to the past experience as some of the nations took advantage to push down the prices.


Another trader added that Malaysia’s rubber exports will drop below one million tonnes as it will cut the production by 5 % that is equivalent to 57, 090 tonnes in 2009. Top producers agreed to cut down rubber exports by 700, 000 tonnes in 2009 as the price of the rubber now are down to 50% of RM12 per kilo during July last year. Among other positive development to support rubber prices in first half of this year is during the wintering period as rubber trees shed and latex output declines.