COLOMBO, Sept. 4 (Xinhua) -- Sri Lanka's rubber industry is wary over the possibility of increased prices as the world's top producers gather to stabilize global prices this week, an official said here on Tuesday.
The Three-Nation Rubber Products International Conference in Bandung, Indonesia, will see Malaysia, Thailand and Indonesia attempt to stabilize the market price for rubber.
Economic giants India and China are also expected to be present at the conference as observers.
Sri Lanka, the world's tenth largest producer of rubber, is concerned that increased prices will result in local industries having to pay a higher price and reduce buyers on the global market.
"Around 70 percent of Sri Lanka's rubber is consumed locally and while a price increase would boost small plantations it is questionable whether the overall economy can absorb the higher price," Colombo Rubber Traders Association Chairman M.S. Rahim told media.
He also pointed out that the world's largest buyers India and China may not be willing to shell out the extra expense if the top producers are to cut their exports by 300,000 tonnes as expected.
In the first half of this year Sri Lanka's rubber exports grew 5.3 percent to 433.5 million U.S. dollars. But earnings in June dropped 15 percent to 64 million U.S. dollars according to Central Bank data.
At the conference Malaysia is expected to propose 10 Malaysian Ringgit per kilogram of rubber instead of 7.47 Malaysian Ringgit.
If agreed upon, 230,000 smallholders in the peninsula will experience a 30 percent increase in income.
Thailand is the world's largest rubber producer with about 3 million tons annually, Indonesia produces over 2 million tons and Malaysia about 1 million tons.
In April the Association of Natural Rubber Producing Countries (ANRPC) revised down its total production estimate in 2012 for member countries to 10.297 million tons from 10.42 million tons estimated earlier due to lower prices.