Malaysia Cutting Rubber Exports 5% in 2009

Cuts in rubber exports have begun in the world’s third-largest rubber producing nation. Malaysia’s Plantations Industries and Commodities Minister Datuk Peter Chin confirmed that the government’s plan to reduce rubber exports by around five per cent this year is underway, and it now remains to be seen whether the measure will bring prices out of the doldrums.

“For the first quarter, Malaysia will reduce rubber exports by 22,000 tonnes,” said Chin. “For the whole of 2009, it will be 57,050 tonnes.” Last year Malaysia exported 1.1 million tonnes of rubber. Along with Thailand and Indonesia – the number one and two global rubber producers – Malaysia has committed to removing approximately 915,000 tonnes of natural rubber from the world market. The three countries, which comprise the International Rubber Consortium (IRCo), also say that a reduction of up to 1,345,000 tonnes is possible, but only if prices further weaken.

Tyre industry demand, which accounts for 70 per cent of global output, has diminished significantly since the closing months of 2008. This factor, coupled with low oil prices that make synthetic rubber a much more affordable option, provide little incentive for natural rubber prices to rise without external stimuli.

“We have already instituted the process of reducing the exports this year. Quotas have been given to the trading houses here. The replanting programme is also happening,” commented Chin further, adding that Malaysia has proposed a meeting between the ministers of the three rubber producing countries under the auspices of IRCo on February 12-13. The ministers are expected to discuss a revision in the floor price of rubber, assistance to smallholders and the issue of non-fulfilment of contracts.