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Move to limit rubber exports may not be effective [03-07-2012]  
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THE plunge in rubber price to near a seven-year low of US$1.10 per kg as the global recession loomed, saw top producers Thailand, Indonesia and Malaysia scrambling to slash exports by a total of 915,000 tonnes in 2009 to help prop up prices.

While the export restriction plan has never been strictly enforced, the rubber market rebounded in mid-2009 mainly due to the rising demand from tyre companies in China and India.

Now, a similar measure is being planned following the fall in global rubber prices by over 20% in the second quarter this year - much to the dismay of the top three world growers, which collectively produced about 70% of the world's rubber production.

Thailand, the world's top producer, last week announced plans to spearhead the move as it sought to garner support from Indonesia and Malaysia to consider limiting their rubber exports in the coming months to help stabilise rubber prices.

It was reported that the officials from the three countries would soon meet to discuss the proposed measure.

While the export restriction in 2009 had never really taken off, some quarters believe that this time around, the top three producers would likely execute and implement the export limits.

Having said that, while the export limit plan may bring some positive sentiment to the rubber prices, some parties are of the view that its impact would not boost prices substantially based on the current bearish fundamentals.

Apart from the unsettling European debts crisis and lower crude oil prices, the rubber market in the coming months is expected to witness increasing production from major players worldwide.

The Association of Natural Rubber Producing Countries (ANRPC), in its latest monthly bulletin released on Sunday, had predicted higher rubber production in 2012 at 10.8 million tonnes, up 4.9% from 10.3 million tonnes produced in the previous year.

The output from ANRPC members represent about 97% of the total annual world natural rubber output. ANRPC said Indonesia, the second largest grower, may see production rising by 8.2% to 3.26 million tonnes, Malaysia may add 0.4% to one million tonnes while Vietnam may produce 915,000 tonnes this year.

For Malaysia, some RM275mil would be invested under the rubber National Key Economic Area mainly involving replanting and new planting of rubber trees nationwide.

In 2012, there would be active replanting activities that would cover about 38,000ha per year focusing mainly in Peninsular Malaysia while new planting activities would cover about 5,000ha each in Sarawak and Sabah.

New rubber growing zones like Sabah and Sarawak would make inroads in larger rubber planting hectarage totalling about 30,000ha under the Ninth Malaysia Plan.

It is reported that Sarawak has about 1.5 million ha and Sabah has some 400,000ha available for rubber cultivation.

In addition, rubber cultivation in the country is not only meant for latex production but for other related products namely tyres, rubber gloves and also, rubberwood which is currently in high demand for furniture.

Source:THE STAR
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