Falling Rubber Prices Hit Burmese Companies

By LAWI WENG

Falling rubber prices worldwide have caused many Burmese companies to curtail exports and temporarily shut down, according to one company official in Rangoon.

Myanmar Rubber Products Co., Ltd, based in Rangoon, a main rubber exporter to China, and other rubber companies have halted exports in recent weeks, said the official.

Another major rubber exporter, Myanmar Shwe Ying International Co., Ltd., has also curtailed exports, he said.

The manager of Myanmar Rubber Products Co., Ltd said the company has been closed for two weeks, and Myanmar Shwe Ying International Co., Ltd curtailed exports about seven weeks ago.

“Usually, we export about 300 million kyat (US $241,935) or 400 tons of rubber to China each month,” said the manager. “But due to falling global rubber prices, we lost 35 percent of the price, so we stopped exporting to China,” he said.

He said the price per pound for RSS 1 grade rubber was now 900 kyat (0.72 cents); RSS 3 was 800 kyat (0.64 cents); and RSS 5 was 730 kyat (0.58 cents). Some prices dropped 250 kyat (0.20 cents) a pound in the past two weeks.

“We hope the global rubber price will recover soon,” he said. “We are having a difficult time handling the situation.”

The fall off has also hit rubber traders and farmers, said a trader in Rangoon. Most rubber trading businesses in Mon State, a major source of rubber, are feeling the effects of falling prices and have cut back on business, said Chit Aung, a former rubber trader.

Many traders have leveraged loans and are worried about meeting their repayment schedules. Companies are holding back shipping exports in hope that prices will turn around quickly.

Rubber is a main agricultural export. Most rubber is exported to China, Singapore and Malaysia.

During fiscal year 2007-08, which ended in March, Burma cultivated more than 364,500 hectares of rubber, producing more than 80,000 tons. Exports are expected to grow by 81,000 hectares in 2008-09.

Burma's rubber cultivation has expanded since 1988 when entrepreneurs were given permission to trade freely. Burma exported 19,200 tons of raw rubber in 2007-08, according to government statistics.