The meeting between the International Tripartite Rubber Council (ITRC) Committee Members and the International Rubber Consortium (IRCo) Board concludes with the conclusion that the price of natural rubber or better known as Natural Rubber (NR) is incompatible with the economic circumstances that affect it .
Although the three governments of the country - Thailand, Indonesia & Malaysia - expressed their concern about the declining rubber prices and unfavorable market factors, they have confidence that the NR market will improve and the price of rubber should reflect the true economic situation.
During the meeting, the participants discussed the welfare of small rubber plantation owners and rubber industries in their respective countries, as well as factors affecting rubber prices as well as possible measures to increase NR prices.
Both ITRC and IRCo are very interested in technical analysis of price movements on the Tokyo Commodity Exchange (TOCOM), the Shanghai Futures Exchange (SHFE), and the Singapore Commodity Exchange (SGX) Indicating that the market is currently in a consolidation phase, a new momentum in setting new directions to the market.
A similar view that the market is in the consolidation phase is also supported by an analysis of open movement - the total number of open (not yet closed or delivered) existing open-ended futures contracts submitted in one day - indicating that TOCOM, SHFE and SGX are in an oversold position, Resulting in short covering in the near future.
This analysis is in line with the situation encountered in the southern hemisphere's production regions, especially Indonesia, which is expected to decline in production as peak season declines.
Decline in production in Thailand and Malaysia is also expected to see low rubber prices and climate change, coupled with high rainfall in northern Thailand that greatly affects rubber production there.
The NR consumption for 2017 is forecasted to continue rising, supported by better world GDP growth, with positive GDP growth in giant economic countries and improved commodity indices increasing NR market sentiment.
Meanwhile, the July estimated revision of the International Monetary Fund (IMF) for GDP growth to 3.5% for 2017 is higher than the previous estimate of 3.4% in January as well as the 2016 GDP performance, 3.2%.
GDP of major NR user countries such as the US, Japan, EU and India is expected to improve, while China's GDP is forecast to remain at 6.7%.
The PRC's own economic growth for K1 2017 and K2 2017 is 6.9%, which has already far exceeded GDP estimates, and was the highest performance in 18 months. This shows great demand.
Car sales in the first six months of this year on the main market of NR - PRC, EU, Japanese & Japanese users - also posted positive growth of 3.8%, 4.7%, and 9.2% for each country.
"We firmly believe that all of the above economic background and consumption patterns have affected the change in the NR stock consumption ratio from 3.02 in early 2016 to 2.38 in July 2017 and is expected to continue to decline to 2.34 at the end In 2017, "said Chairman of the Board of Directors of IRCo, Bpk. Mesah Tarigan.
In contrast, the Association of Natural Rubber Producing Countries (ANRPC) estimates that there will be a deficit in the number of global NR supply and demand in 2017 even though the analysis does not take into account the possible decline in NR production in Thailand and Malaysia due to the Decline and climate change.
ITRC and IRCo will continue to monitor and see market changes and take into account the various steps that can be taken to increase the NR price to help small rubber plantation owners in ITRC countries so that they can earn an adequate income.
In addition, the three countries are also committed to focusing on the long-term balance between supply and demand and in this regard, they welcome the Thai Government's plan to cover a 240,000-acre rubber estate that will reduce the amount of rubber production by 360,000 per year.
Thailand, Indonesia and Malaysia will continue to study long-term measures to increase their domestic NR consumption and work together within the ITRC framework for long-term NR price stability.
About International Tripartite Rubber Council (ITRC) & International Rubber Consortium Limited (IRCo) ITRC countries are producing 65% of all global natural rubber (NR) production and exporting 72% NR
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