Rubber producers threatened by e-trade

HATYAI, THAILAND, 3 July 2000 (MaxisNet) - Leading world rubber producers have grown increasingly concerned over prospects of a burgeoning online trade of the commodity on the Internet, traders said.

"We are worried by news that six major tyre makers are joining hands to set up their website to trade rubber online by the year-end," said Choosit Opaswong, president of the Thai Rubber Association.

"The grouping of the six major tyre makers would probably mean that they would gain more purchasing power over sellers," he said without elaboration.

Choosit said a two-day meeting of rubber producers from Thailand, Indonesia and Malaysia in this southern Thai town on Saturday discussed the future impact of an electronic rubber market dominated by major tyre producers.

He said the six tyre makers currently accounted for around 70 percent of world rubber demand. Thailand, Indonesia and Malaysia together produce almost 80 percent of world rubber supply.

Choosit said the website, RubberNetwork.com, being launched by tyre producers would represent Cooper Tire & Rubber Co, Goodyear Tire and Rubber Co, Michelin, Sumitomo Rubber Industries Ltd, Pirelli and Continental AG.

"At this stage, we still know very little about the online rubber trade," he said.

The Thai trader said the online rubber market would be a topic to be discussed at another producers meeting in Indonesia next month. Internet rubber trade would help make the market more transparent and benefit buyers, a few buyers at the meeting said.

They said the new setup would help buyers obtain more competitive supply offers from rubber producers.

"As a buyer, it is good to have as many offers as possible and the Internet can greatly cut the purchasing cost by making the gathering of information very cheap," said an executive at a U.S.-based glove manufacturer.

"I am sure online rubber trade will have some impact although we cannot probably yet see what that will be," he said.

U.S. Internet firm Commodinet recently announced that it would launch the world's first physical Internet rubber trading floor by mid-July to capture as much as 70 percent of world physical rubber trade by 2004.

Brick and mortar, e-business can work together