JAKARTA (rambuenergy.com) – The Ministerial Committee Meeting of the International Tripartite Rubber Council (ITRC), held in Jakarta, which comprises of Indonesia, Malaysia and Thailand, had agreed to establish a Regional Rubber Market (RRM) by June 2016 as a move to stabilize the world’s rubber price.
A joint communiqué issued after the meeting, the ITRC said that the RRM is “an initiative of member countries in providing a platform for better price discovery and effective hedging functions which would ultimately benefit the producers, consumers and market players around the world.”
To realize the plan, the rubber council has established two technical working groups to accelerate the drafting of related bye-laws and exchange rules and regulations including technical specifications and arbitration resolution procedures.
“Even though, the RRM is to be established by June 2016, but the 3 ministers urged ITRC/IRCo to expedite the establishment to be within 3 months to the extent possible,” it said.
The decision to establish RRM came as the world rubber price hit as low as US$2.5 per kilo, far below a peak of US$4.5 per kilo few years ago. This has resulted in a decline in production and hit rubber producing countries, including smallholders.
Indonesia’s Trade Minister Thomas Lembong said in a press conference after the ITRC’s meeting on Thursday afternoon that in addition to establish a regional rubber market, member countries also agree to increase domestic natural rubber consumption by 300,000 tons for road construction and other areas such as rail rubber pads, dock fenders and other infrastructure projects.
“In this context, the three countries will exchange technology and expertise in the use of natural rubber for new road construction and resurface,” Minister Lembong said, citing the joint communiqué.
The rubber council also agreed to start a study to be completed within one month for the possibility of implementing a subsequent Agreed Export Tonnage Scheme (AETS) in 2016, a kind of export quota for member countries.
Minister Lembong also added that Vietnam has expressed interest to join ITRC as a strategic partner. The three ITRC countries and Vietnam will represent 74.3 percent of global natural rubber production. (*)