Analyst predicts weak rubber market this year<\/p>\n
JAKARTA (JP): Rubber prices are likely to fall to US$1 a
\nkilogram this year because the commodity's four-year marketing
\ncycle is entering its downside, a rubber analyst warns.<\/p>\n
Harry Tanugraha of PT Tunas Perdana Securindo predicted that,
\nif the movement of rubber prices last year reflected the
\ncommodity's four-year cycle, producers should be prepared that
\nthis year's prices could fall to 1994's levels.<\/p>\n
Harry said that last year had been a tough one for the rubber
\ntrade because 1995 bore the peak of the cycle with rubber prices
\nreaching their highest levels.<\/p>\n
The average rubber price in 1995 was $1.5 a kg, compared to $1
\nin 1994 and $1.3 in 1996.<\/p>\n
The country's export revenue from rubber in 1995 reached $2
\nbillion, compared to $$1.27 in 1994 and $1.7 billion last year.<\/p>\n
Harry predicted that the conditions in 1994 were likely to
\nrecur this year.<\/p>\n
He said the rubber market would slacken further this year with
\ncountries such as Russia and China -- which usually push up
\nprices -- postponing their orders.<\/p>\n
Russia and East European countries had tight budgets while
\nChina was busy dealing with its internal political affairs and
\nthe hand over of Hong Kong to Chinese sovereignty, he said.<\/p>\n
\"Worse still, producer countries like Thailand, Indonesia and
\nVietnam have announced plans to increase their natural rubber
\nproduction,\" he said in a statement sent to The Jakarta Post
\nyesterday.<\/p>\n
He said this situation, which had developed since late 1995,
\nhad slashed prices from $1.6 a kg in early 1996 to $1.25 a kg at
\nthe end of 1996.<\/p>\n
On the international market, he said, the impact of global
\ntrade could already be felt.<\/p>\n
\"The United States, for example, has decided to cut back its
\nbuffer stocks and gradually sell on the market starting this
\nyear,\" he said.<\/p>\n
He said the current rainy seasons should have boosted prices,
\nbut the United States' move and the slackening demand in other
\ncountries were likely to suppress prices if not cut them.<\/p>\n
In Indonesia, Harry said, low prices last year had caused
\nseveral producers to convert their rubber plantations to oil
\npalm, housing and industrial estates.<\/p>\n
He said the government's plan to establish a futures commodity
\nexchange would help remove price and trade distortions affecting
\nthe market.<\/p>\n
\"It is time to remove interventions made for the sake of price
\nstabilization, which, in the end, causes market distortions and a
\nhigh (cost) economy,\" Harry said.<\/p>\n
The government last month submitted a long-awaited bill on
\nfutures commodity trading to the House of Representatives.<\/p>\n
Minister of Trade and Industry Tunky Ariwibowo said the bill
\nwould basically provide a legal foundation for futures commodity
\ntrading, which would be supervised and controlled by the
\ngovernment's Commodity Supervisory Board under the Ministry of
\nIndustry and Trade. (pwn)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/analyst-predicts-weak-rubber-market-this-year-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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