Cambodian Rubber Prices Rise After Floor Price Agreed

BY KANG SOTHEAR AND GEORGE STYLLIS | NOVEMBER 8, 2014

The price of Cambodian rubber sold locally and internationally is creeping back up after a floor price was agreed upon last month by the region’s rubber representatives, giving traders hope that the industry is gaining strength after languishing for months due to oversupply.
Cambodian government officials and industry representatives have urged buyers and sellers to ensure that the market price of rubber remains in line with the floor price of $1.50 per kg agreed at an October meeting in Malaysia.
The floor price aims to revive an industry that has been badly affected by plummeting global prices due to slowing demand from major importer China.
Heng Sreng, managing director of local rubber exporter Long Sreng International Co., Ltd., said export prices have increased from $1,450 per ton to the agreed $1,500 about 10 days after the meeting in Malaysia.
“Most rubber export companies are applying the floor price, including my company,” he said.
“The agreement is good for companies that have funds to cover their expenses, but not so good for those that don’t have funds to cover their expenses because exports are going to decrease,” he said adding that he has deliberately restricted his sales to limit the supply of rubber on the market.
Men Sopheak, secretary-general of the Association for Rubber Development in Cambodia, said though there is little preventing sellers from selling at below market rates, they appear to be heeding advice in a bid to protect their trade.
“Basically, we just advised the relevant stakeholders to do their part to follow the recommended floor price. They are doing their best to follow this price but we can’t guarantee it…. It’s their decision,” said Mr. Sopheak.

Thy Sambo, president of the Tbong Khmum Family Rubber Association, said that the price of natural rubber sold locally in Tbong Khmum province has been more stable in the past few weeks. Prices have increased by 100 riel to 4,000 riel, or $1, per kg, said Mr. Sambo.
“The rubber price situation is better than before because in some areas the prices are stable and not going down. But mostly the price has gone up a bit, but I don’t know reasons for this,” he said.
Similarly, Chea Sayim, president of the Memot Family Rubber Development Association in Kompong Cham province, said the price of rubber latex, the white sap used to make rubber, has also increased by 100 riel, or $0.02, to $0.52 per kg since the floor price was set.
“Officials from the general department of rubber [at the Agriculture Ministry] recently visited my association and spoke to rubber farmers about pricing and the result of the meeting [in Malaysia].”
Mr. Sayim said the slight price increase has reinvigorated local trade in the last two weeks.
“I have seen that there have been more dealers arriving in tuk-tuks coming to buy rubber from the plantations,” he said.
sothear@cambodiadaily.com, styllis@cambodiadaily.com