WORLD: Rubber exchange in the works

Malaysia's Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas said the three countries, via LMC International, would carry out a joint study on its viability until year-end, with the exchange expected to be up and running in 18 months.

Thailand, Indonesia and Malaysia are the world's first, second and sixth-largest natural rubber producers, respectively,

"The regional rubber exchange will provide a platform for better price discovery and effective hedging functions, bringing benefits to producers, consumers and market players.

"In this context, the countries agree to undertake follow-up measures recommended in the report and work towards realising the regional rubber market within 18 months,” said Uggah after the International Tripartite Rubber Council (ITRC) ministerial committee meeting, in Kuala Lumpur on 20 Nov 2014.

With the rubber exchange, ITRC will be able to exercise better control over the commodity and rival Tokyo Commodity Exchange (Tocom) and the Singapore Exchange (SGX).

Sources said the exchange could be called the Asean Rubber Exchange and located in either Kuala Lumpur, Bangkok or Jakarta.

The initiative is timely, seeing that the natural rubber price had fallen to its five-year low of RM4.55 per kg two months ago, although it has since strengthened to RM4.70 per kg.

The three countries account for 67 % of global natural rubber production of more than four million tonnes and 79 %  of global natural rubber net export, as well as a total of 4.6 million rubber smallholders.

"The ministers are also optimistic that the global supply and demand balance will improve beginning the fourth quarter of this year, arising from the reduction of supply and an increase in demand due to the substitution of synthetic rubber.”

Uggah said ITRC had also beefed up ties with other natural rubber producing countries in the region, namely Cambodia, Laos, Vietnam and Myanmar.
Malaysia was the world's top natural rubber producer in the 1980s, but has since dropped to sixth place with annual production of 800,000 tonnes.

Source: Daily "The New Straits Times”, Kuala Lumpur; 21 Nov 2014
(Syed Rashid Ali, Karachi, Pakistan)