INTERNATIONAL RUBBER CONSORTIUM LIMITED 

13th October 2008

The International Rubber Consortium Limited (IRCo) noted with concern the more than abnormal decline in natural rubber prices beginning late September till now. Prices on some physical markets have dropped more than US 75 cents/kg in these last than 10 days.

Prices on the Tokyo Commodity Exchange (TOCOM), the leading natural rubber market indicator, had hit limit downs 5 times during this period and reached the psychological level of 200 yen per kg on Friday, its weakest in nearly two years.

The reasons are all external, but there is no running from the fact that these external factors have their impact, to one extent or another, on every economic activity.

It started with the crash of the American financial system, pulling with it other financial and stocks markets worldwide. The protracted and unconsolidated rescue plans did help restore the needed confidence. Crude oil prices came tumbling down and reached below US $80 per barrel on Friday. The US dollar weakens against other major currencies, especially the yen.

Nevertheless, the fundamentals for the natural rubber market are still firm.

World natural rubber supply and demand are at about a balanced equilibrium. For this year, world rubber production is forecasted at about 10 million tonnes this year, a rise of 3.8% over the year before, while demand is seen at approximately 9.8 million tones, up 2%.

Natural rubber stocks levels too are at their lows. IRSG estimated world natural rubber stocks as at May 2008 was at 1,871,000 tonnes, 30% below the norm. In Japan, The Rubber Trade Association latest report had Japan’s crude rubber inventories as of 20 September dropping to 4,358 tonnes, more than 50% below the norm. While in China, the stocks has dropped from 92,390 tonnes beginning January to 64,850 tonnes as of 9 October

China the largest consumer is still said to be under bought. Up to August, China had imported 1.1 million tonnes compared to a forecasted import of 1.8 million tonnes for the whole of 2008. Chinese buyers have been on the side line since July buying from hand to mouth waiting for bargains. With a low stock level of around 25% of their average monthly consumption, they cannot afford to stay on the side line for too long.

All the relevant financial authorities around the world are hard at formulating and implementing plans not only to cushion the impact of the American financial crisis but also to restore public and business confidence in the financial systems.

It is good to note that the ORRAF, the Office of Rubber Replanting Aid Fund, in Thailand, had advise smallholders in the country, in order to tide over this temporary setback in the rubber market, that they slow down in their tapping activities.

The IRCo Board of Directors and its expert Committee on Strategic Market Operation will meet later this week, on 16 and 17 October in Bangkok. The current rubber market situation no doubt will be on top of their agenda.

Issued by:

Abdul Rasip Latiff

Chief Executive Officer

International Rubber Consortium Limited

2^nd Floor Rubber Research Institute of Thailand

50 Phaholyothin Road

Chatuchak 10900

Bangkok

13^th October 3008