4 AUGUST 2017


The Joint Meeting between Senior Officers of the International Tripartite Rubber Council (ITRC) and the International Rubber Consortium (IRCo) Board of Directors was held on 3 August 2017 in Bangkok, Thailand.

The meeting expressed concerns on the current downward rubber price trend and market factors that have affected Natural Rubber (NR) prices. The meetings were of the view that the current NR price is not reflective of the economic fundamentals.

To ensure the wellbeing of rubber smallholders and rubber industry in Thailand, Indonesia and Malaysia, the meeting discussed all relevant factors contributing to the rubber price and possible measures to improve rubber price.

Based on in-depth analysis, three member countries were encouraged by the findings of various technical analysis on the price movement in 3 rubber futures markets which indicate that the market was entering a consolidation phase that signify the establishment of a new momentum to set a new direction of the market. In addition, this is supported by the analysis of the open interest movement which also confirms that the 3 futures markets are in oversold positions, hence short covering is foreseen in the near term. Open interests refer to the total number of open or outstanding (not closed or delivered) futures contracts that exist on a given day, delivered on a particular day.

This analysis is supported by the prevailing fundamentals condition as producing areas in southern hemisphere particularly in Indonesia is expected to experience slower production as the wintering season peaks. In addition to that, a reduction in production from Thailand and Malaysia is also anticipated due to low rubber prices and change in weather pattern. Recently, rubber production in northern Thailand was affected due to unusual heavy rains.

Positive GDP growth of major economies and improving commodity indices would further enhance the sentiment in NR market. It is expected that the NR consumption for this year will further increase supported by a better world GDP growth.

International Monetary Fund (IMF) revised estimates of the world GDP growth for 2017 in its July forecast at 3.5% is higher than the earlier estimates of 3.4% forecast in January 2017. This is higher than the GDP performance in 2016 at 3.2%. Major NR consuming countries including USA, Japan, EU and India were all forecast to improve, while China’s GDP was forecast to remain at 6.7%. As a matter of fact, the actual China economic growth in 1Q17 and 2Q17 at 6.9% has exceeded its forecast/targeted growth – strongest performance in 18 months. This implies a strong demand side.

Automobile sales in major NR consuming countries i.e. China, EU and Japan in the first 6 months of this year recorded a positive growth of 3.8%, 4.7% and 9.2% respectively.

All the above has led to improvement of NR stock-consumption ratio from 3.02 at the beginning of 2016 to 2.38 in July 2017 and is expected to further decrease to 2.34 as at end of 2017. According to the Association of Natural Rubber Producing Countries (ANRPC), there would be a deficit in global supply-demand of NR in 2017. ANRPC’s projection has not taken into consideration the potential deduction of NR production in Thailand and Malaysia due to low prices and changes in weather pattern.

ITRC/IRCo will continue to monitor and analyse the market trend as well as explore other possible measures towards strengthening NR prices. This is to ensure that the smallholders in the ITRC Countries will benefit from remunerative income. In addition, focus will also be given by the three Countries towards long term balancing supply and demand.  In this regard, member Countries were encouraged by Thai Government’s plans to remove permanently 240,000 ha of rubber area. This will permanently remove supply of 360,000 MT of NR per year.

The three Countries will continue to explore long term measures to enhance domestic consumption of NR including the use of NR in road constructions, rubber dam etc.

The three Member Governments have strong confidence on the health of NR market and the prices should adjust to reflect the fundamentals.

The three Countries are also committed towards cooperation under the framework of ITRC to ensure long term price stability of NR.


4 August 2017