* No signs IRCo will intervene on prices, Thai crisis hurts
* Physical prices near five-year lows
* IRCo's call to limit sales falls on deaf ears
By Lewa Pardomuan
SINGAPORE, May 9 The world's biggest rubber
producing region has insufficient funds to intervene in the
market to stem a price slide that has pushed rubber futures to
multi-year lows, Asian officials and traders said.
Tokyo rubber futures have plunged more than 25
percent this year, hovering near their lowest in more than four
years, while physical prices on Singapore's SICOM are
languishing near five-year lows.
Market confidence has been dented by a weaker economic
outlook in top market China and swelling global inventories,
while top producer Thailand has announced plans to sell 200,000
tonnes from its stockpiles.
The International Rubber Consortium (IRCo) grouping
Thailand, Indonesia and Malaysia - who together account for more
than 70 percent of global natural rubber output - appears
hamstrung by a lack of cash and political will.
"There aren't many options on the table. The three countries
have to pump money into IRCo to do the stock management. It will
run into billions, so it is not feasible at this juncture," said
a source at the Malaysian government.
"Thailand's government is in caretaker mode, Indonesia is in
election mode. I don't think anything will move now. These are
the two major players that have to call the shots," said the
official, who declined to be identified due to the sensitivity
of the issue.
Indonesian officials suggested that Thailand should take the
lead in any proposal, but the ousting of Prime Minister Yingluck
Shinawatra has deepened the country's six-month long political
"I am not blaming Thailand, but it is the biggest rubber
producer. Funding has become a problem because Thailand can't
give its commitment when the government is in a transition,"
said Indonesia's trade minister Muhammad Lutfi.
Indonesia on Friday suggested IRCo could be expanded to
include other rubber producing countries such as Vietnam,
Cambodia, Laos and Myanmar.
Tools available to the alliance include curbing exports,
reducing tapping by farmers or buying rubber for stockpiling and
sale at a later date.
Traders say the alliance has been undermined by a lack of
trust among its members, as well as a lack of funds, and its
most recent call to limit sales at current prices has fallen on
The three nations last acted in 2012-13 when they agreed to
remove 300,000 tonnes, or 3 percent of 2012 global output, from
the export market.
However, the intervention only briefly supported prices and
Indonesia publicly called for the pact to be discontinued.
Dealers said the current situation was more severe.
Global natural rubber stocks are estimated to rise about 10
percent to 3.21 million tonnes at end-2014, according to figures
from the International Rubber Study Group, about 27 percent of
Stocks in Thailand, Indonesia and Malaysia are estimated by
the Association of Natural Rubber Producing Countries at about
"The only thing that can stop the slide is for world stocks
to get depleted and demand starting to outstrip supply," said a
dealer in Singapore.
(With reporting by Apornrath Phoonphongphiphat in Bangkok,
Anuradha Raghu in Kuala Lumpur and Yayat Supriatna in Jakarta)