Major Natural Rubber producers to cut rubber supply

Bangkok: In a recent meeting of International Tripartite Rubber Council (ITRC), the three member countries - Indonesia, Malaysia and Thailand have decided to cut down rubber supply to international markets in order to stabilize international rubber prices. The three countries announced the action to be taken under “Agreed Export Tonnage Scheme” (AETS), which will be implemented from March 1 to August 31, 2016.

The three countries were concerned about the global slump in the prices of Natural Rubber (NR), which is directly impacting the income of smallholders in these countries. Thus, in a bid to improve the Natural Rubber prices, these countries further decided to increase domestic consumption by increasing usage of NR in construction of roads, rail pads and other significant areas.

The recent report published by TechSci Research, “Thailand Tyre Market Forecast and Opportunities, 2020” depicts that Thailand is the leading rubber producer around the world, accounting for almost one-third of the global rubber production in 2014. Further, the geographical location and cheap labor also compliments the country to be one of the most preferred destination for the production of automobiles.

As per TechSci Research, the move to cut down rubber supply by these leading rubber producers would affect the prices of natural rubber in international markets and would substantially increase the prices of tyres in the global markets consequently increasing operational overheads of OEMs.