RI, partners asked to set rubber prices

Local rubber producers have urged the Indonesian government to discuss support measures with two other main rubber producers, Thailand and Malaysia, to halt the decline in natural rubber prices.

Asril Sutan Amir, the chairman of the Indonesian Rubber Association (Gapkindo), said in Jakarta that Indonesia and fellow rubber producers Malaysia and Thailand should set a minimum price for rubber to avert any further price slide of the commodity in the overseas market.

The world’s largest suppliers of natural rubber needed an immediate tripartite agreement on the lowest price acceptable by their producers, he said in Jakarta on Friday.

“We have some options, including export restrictions, supply management plans or agreed export tonnage. This will rely on the compromise by the three countries,” Asril said during a press briefing at his office.

Trade Minister Gita Wirjawan has reportedly met with Thailand’s Deputy Minister of Agriculture and Cooperatives Nuttawut Saikua to initiate talks on the issue, agreeing that the three countries would implement “appropriate measures” to stop the continuous fall of rubber prices.

Press reports said that agricultural officials from Thailand would also meet Malaysia’s minister of plantation industries and commodities this week to talk about measures which could be used to halt the decline in rubber prices.

Rubber tumbled to its lowest level in more than two years in Tokyo on Friday on concern that a global economic slowdown will cut demand.

November-delivery rubber plunged 5.1 percent to end at ¥231.7 a kilogram (US$2,883 a metric ton), the lowest settlement level since Nov. 11, 2009, on the Tokyo Commodity Exchange. Futures have lost 29 percent this quarter, the most since the global financial crisis in 2008. China’s markets were closed for a holiday on June 22-24.

Asri said Indonesia, Malaysia and Thailand, which account for 70 percent of the global rubber output, should ideally set a minimum price of about $4 per ton.

The slump in prices have made farmers reduce tapping, potentially leading to a 9.7 percent decline in Indonesia’s rubber production this year to 2.8 million, according to Asril.

That is lower than Gapkindo’s earlier estimate of 2.95 million tons in May and 3 million tons in February, he added.

In the first three months of this year, production already declined by 6 percent to 700,000 compared to the same period a year ago.

China is Indonesia’s second largest buyer of natural rubber, which is used mainly to make tires, after the United States, with total demand reaching around 409,377 tons, the association said.

Exports may drop by up to 8 percent to 2.3 million tons this year from last year, with around 82.14 percent of total production for export, while the remaining 500,000 tons would be supplied to the domestic market, Asril said.

“We see a high demand in the domestic market and output may rise to 600,000 tons this year,” he added.

During the first quarter of this year, Indonesia, the world’s second-largest natural rubber producer, exported 564,320 tons of rubber, down by 10 percent from the same period last year, according to Gapkindo’s statistics.

Due to the lower export volume and price, export value was down by 34.94 percent to $1.98 billion in the first quarter from the previous year.