Malaysia does not plan to set minimum prices for the local natural rubber market in order to control the commodity's price slide as it will require a large financial allocation, the Bernama news agency reported Monday.
The report cited deputy minister of plantation industries and commodities Hamzah Zainudin, who said rubber prices were determined by several factors including global growth rates and the economic climate in major natural rubber-importing countries, as well as supply and demand in the global rubber market.
The minister was addressing the Dewan Rakyat, or House of Representatives, in Kuala Lumpur Monday.
However, he said, "to strengthen rubber prices, Malaysia, Thailand and Indonesia, the world's three major rubber producers, are closely monitoring the rubber price trend in the world market under the International Rubber Council framework of cooperation."
As of October 1, Malaysia has complied with a plan by the International Tripartite Rubber Council to cut its natural rubber exports by 23,954 mt over the fourth quarter.
On August 15, the ITRC agreed to cut exports by 300,000 mt over six months from October 1 under an Agreed Export Tonnage Scheme. Under the AETS, Thailand will cut exports by 150,000 mt, Indonesia by 100,000 mt and Malaysia by 50,000 mt.
The three countries will also implement a replanting program for 100,000 hectares of rubber trees, which will result in a further reduction of exports by 150,000 mt. In all, 450,000 mt of natural rubber will be taken out of the supply chain.
Thailand, Indonesia and Malaysia account for about 70% of global natural rubber production.
