Analyst predicts weak rubber market this year
Analyst predicts weak rubber market this year
JAKARTA (JP): Rubber prices are likely to fall to US$1 a
kilogram this year because the commodity's four-year marketing
cycle is entering its downside, a rubber analyst warns.
Harry Tanugraha of PT Tunas Perdana Securindo predicted that,
if the movement of rubber prices last year reflected the
commodity's four-year cycle, producers should be prepared that
this year's prices could fall to 1994's levels.
Harry said that last year had been a tough one for the rubber
trade because 1995 bore the peak of the cycle with rubber prices
reaching their highest levels.
The average rubber price in 1995 was $1.5 a kg, compared to $1
in 1994 and $1.3 in 1996.
The country's export revenue from rubber in 1995 reached $2
billion, compared to $$1.27 in 1994 and $1.7 billion last year.
Harry predicted that the conditions in 1994 were likely to
recur this year.
He said the rubber market would slacken further this year with
countries such as Russia and China -- which usually push up
prices -- postponing their orders.
Russia and East European countries had tight budgets while
China was busy dealing with its internal political affairs and
the hand over of Hong Kong to Chinese sovereignty, he said.
"Worse still, producer countries like Thailand, Indonesia and
Vietnam have announced plans to increase their natural rubber
production," he said in a statement sent to The Jakarta Post
yesterday.
He said this situation, which had developed since late 1995,
had slashed prices from $1.6 a kg in early 1996 to $1.25 a kg at
the end of 1996.
On the international market, he said, the impact of global
trade could already be felt.
"The United States, for example, has decided to cut back its
buffer stocks and gradually sell on the market starting this
year," he said.
He said the current rainy seasons should have boosted prices,
but the United States' move and the slackening demand in other
countries were likely to suppress prices if not cut them.
In Indonesia, Harry said, low prices last year had caused
several producers to convert their rubber plantations to oil
palm, housing and industrial estates.
He said the government's plan to establish a futures commodity
exchange would help remove price and trade distortions affecting
the market.
"It is time to remove interventions made for the sake of price
stabilization, which, in the end, causes market distortions and a
high (cost) economy," Harry said.
The government last month submitted a long-awaited bill on
futures commodity trading to the House of Representatives.
Minister of Trade and Industry Tunky Ariwibowo said the bill
would basically provide a legal foundation for futures commodity
trading, which would be supervised and controlled by the
government's Commodity Supervisory Board under the Ministry of
Industry and Trade. (pwn)