So far the natural rubber market isn't exactly quaking in its boots at the promise of the Big Three rubber producers to restrict production and exports and stockpile their own rubber.
World rubber prices-after spiking sharply in the last few months-actually started to inch down the week of April 15.
Thailand, Indonesia and Malaysia sent senior agricultural officials to Bangkok, Thailand, April 11-12 to start the setup of a rubber consortium under the aegis of the newly formed International Tripartite Rubber Organization.
The three countries established a $225 million fund for the consortium March 1.
Their agreement, still unavailable in the U.S. as of April 17, was to outline how the consortium will buy and stockpile rubber if prices fall below a certain agreed-upon price, similar to the operations of the now-defunct International Natural Rubber Organization.
The Southeast Asian countries agreed in December to cut NR output by 4 percent and exports by 10 percent, the officials at the Bangkok meeting told Dow Jones Business News. They expected to sign the consortium agreement by the end of April.
At this point, ITRO is totally inoperative as far as the rubber trade is concerned, according to Lou Mucciolo, executive vice president of the New York-based Alan L. Grant Division of Imperial Commodities Corp.
``No offers for rubber are being made, and there's no information being issued from the producing countries pertaining to the application of this agreement,'' said Mucciolo, who also is president of the Rubber Trade Association of North America. ``There's nothing on withholding exports or cutting back production.''
NR prices have been slightly lower on the Tokyo and Singapore commodity exchanges, after the substantial gains the first three months of this year. These price drops usually take their time filtering down to the physical trading of rubber, Mucciolo said, but they're starting to take effect there, too.
The April 15 price for Standard Indonesian Rubber 20-the variety most often used by U.S. tire manufacturers-was 34 cents per pound delivered to New Orleans or Norfolk, Va. This compared with 35 cents on April 5 and 373/4 cents on March 15.
``Supply and demand will catch up with prices eventually,'' Mucciolo said. ``It's been a very quiet market the last week and a half.''