UPDATE: IRCo, China Association To Seek To Stabilize Rubber Prices

SINGAPORE (Dow Jones) - The International Rubber Consortium, representing the Southeast Asian countries that produce two thirds of world natural rubber, will work with the Association of the China Rubber Industry to offset the volatility of the price of rubber , IRCO chief said Wednesday.
Benchmark Tokyo rubber futures hit a record last month, but have since fallen to multi-month lows due to tensions in the Middle East and the earthquake and tsunami that struck Japan last week.
The two organizations agreed on collaboration during an industry conference in China Tuesday, IRCO Yium Tavarolit CEO said by telephone.
"The CRIA made the request to work together to reduce price volatility. We will come up with a plan to work together in the future. They said they were suffering due to high rubber prices before, "he said.
The associations created a working group this year to determine what actions can be taken to combat price volatility, he said.
China is the world's largest natural rubber consumer and importer. IRCO is composed of Thailand, Indonesia and Malaysia, which together represent 70% of world production of natural rubber.
The collaboration between IRCO and ERIC occurs after Yium IRCO said Tuesday that it is likely to convene a meeting this week to discuss measures to support rubber prices.
Rubber futures on the Commodity Exchange in Tokyo climbed to a record Y535.7 a kilo on 18 February but have since fallen sharply, reaching a minimum of four months of Y335/kg Tuesday. The benchmark August contract was trading at Y363.5/kg at 0607 GMT on Wednesday.
The contract fell more than 10% in the first two days this week because of concerns over demand, but recovered in the evening session on Tuesday, which is considered part of the deal the following day.
IRCO market monitoring
Yium said IRCO member countries are monitoring the prices of rubber and convene an emergency meeting if prices resume their steep declines.
"We will be monitoring prices closely," he said.
He said the recent drop in prices have been driven by the bearish sentiment due to the Middle East and Japan, but that the grounds for the rubber are currently undertaking.
Seasonal factors will reduce production in the first half of the year, while large consumers like China, India and the U.S. positive reported car sales figures in February, he said.
Yium said that although it may take measures to support rubber prices when they fall below what the fundamentals suggest that there is little producers can do when prices rise sharply as they did at a rally spread between December and February, as upward movement was driven by speculation in the futures market.