If this is how a natural rubber cartel would work, bring it on. That's the logical reaction by price-conscious rubber product company executives to the current state of the NR-producing industry. Malaysia and Thailand, in the process of abandoning the International Natural Rubber Organization that has supported NR prices for 19 years, are buying up thousands of tons of rubber from their own growers to force up prices.
How's it working? NR prices are bottoming out, and INRO can't do a thing about it.
For only the second time in INRO's 19-year history, world NR prices have fallen below the organization's floor level at which point it must start buying rubber to raise prices. When prices slumped last March, INRO bought and stockpiled rubber and prices rose. This time, there's no money in the till for INRO to do its job.
Thailand and Malaysia refuse to meet their remaining obligations to provide funds for INRO's operations and buffer stock, and there is little likelihood any money will be coming soon.
For Thailand and Malaysia, INRO's inability to influence NR prices constitutes half of a self-fulfilling prophecy. INRO really is helpless, as the two countries maintain. Never mind it's mostly their intransigence about funding the organization that is to blame.
The other half of their prophecy is that they can influence prices worldwide. So far, that's not happening. And unless Indonesia—the No. 2 producer and a firm supporter of INRO—reverses itself and joins in a cartel, that won't occur.
Thailand and Malaysia thought they would teach the rest of the world a lesson about NR and the solidarity of Southeast Asian countries. So far, they've only demonstrated their inability to control the market.