Asian rubber producers to blacklist defaulters – Thai body

BANGKOK (Reuters):The world's top rubber producers are blacklisting buyers which have failed to honour their contracts after recent defaults caused panic selling in the physical market, the Thai Rubber Association said on Monday.

Thailand, Indonesia and Malaysia backed off from a plan to bolster prices at their weekend meeting in Bangkok, but pledged to prevent defaults from recurring after buyers, mostly from China, wanted to renegotiate contracts as prices plunged to around $3 per kg.

"There have been some contract defaults and that was mentioned in the weekend meeting in Bangkok," Pongsak Kerdwonbundit, the association's president, told Reuters.

"That's why we need to stop further defaults by blacklisting those buyers who have defaulted." Buyers in top consumer China shocked the market late in 2008 when they refused to pay for their cargoes after prices tumbled by more than half from their peaks in the wake of a global economic meltdown that drove automakers in Europe, North America and Japan to their knees. Thai RSS3 grade, seen as a benchmark physical rubber, struck an all-time high at $6.40 a kg in February before falling to around $3.40 on concerns the debt crisis in Europe could curb auto demand and fears of slowing imports from top consumer China.  Pongsak of the Thai Rubber Association said the group was assessing the number of defaulted cargoes and would send the names of errant companies to the International Tripartite Rubber Council (ITRC), which organised the Saturday meeting. "Other exporter associations in Indonesia and Malaysia would do the same. So that the ITRC can blacklist them," he added. Thailand, Indonesia and Malaysia, which account for 70 percent of global output, said on Saturday they did not see any immediate need for price intervention because moonsoon rains were likely to curb supply, pushing up prices. Dealers however said there is still a possibility that producing countries will take unilateral action to support the market.

The Indonesian Rubber Association (Gapkindo) said on Monday the ITRC would review the situation in December, when it holds its annual meeting. "The meeting in December is a ministerial meeting and it is a routine meeting," said a senior Malaysian government official with direct knowledge of the matter.

"A variety of topics will be addressed including price assessment but we are not expecting anything conclusive to be determined at that meeting," he said adding that the government is concerned about keeping prices at a profitable level for Malaysian smallholders.

Rubber prices, which have almost halved this year, should find support at $3.0 to $3.5 per kg over the medium term, helped by a seasonal fall in supply plus possible intervention by the Thai government, dealers and industry officials said. "The rainy season has already started and the rains have now disrupted tapping in the south," said a trader in Hat Yai, the centre of Thailand's rubber trade. Key TOCOM rubber prices plunged as much as 3.7 percent on Monday on disappointment that key rubber producing nations had failed to come up with measures to push up prices, but a fall below the 250 yen level may be avoided given an expected supply shortage.

"We have no raw materials. Farmers do not tap rubber trees because of heavy rain and low prices," said Asril Sutan Amir, chairman of Gapkindo, adding he expects the shortage to lead to falling Indonesian natural rubber exports in the next several months. ($1 = 31.000 Thai Baht)