Association doubts rising rubber price to persist

Association doubts rising rubber price to persist

Adianto P. Simamora, The Jakarta Post, Jakarta

The price of natural rubber in the international market has been
on the rise during the past several months, but local rubber
association doubted whether the trend would continue throughout
the remaining period of this year.

"The price has been recovering but it is still questionable if
the trend will continue," Suharto Honggokusumo, executive
director of the Indonesian Rubber Association (Gapkindo) told The
Jakarta Post on Monday.

As of last Friday, rubber price reached US$0.80 per kilogram,
compared with $0.45 per kilogram in December.

"This (price hike) is only a seasonal trend mainly due to the
combination of limited stocks and high demand in international
markets," he said.

According to Suharto, the decrease in rubber stocks are due to
the weather condition in several producing countries including
Indonesia.

Indonesia is the second largest rubber producer in the world
after Thailand with a total output of about 1.55 million tons
last year.

Minister of Industry and Trade Rini M. Soewandi earlier said
that she and her counterparts from Thailand and Malaysia were
planning to cut rubber output in a bid to help jack up rubber
prices to around $1 per kilogram this year.

In December, ministers from Indonesia, Thailand and Malaysia
signed a joint ministerial declaration to cut combined rubber
output by 4 percent and exports by 10 percent in 2002.

Under the declaration, Thailand had pledged to lower its
export to 1.97 million tons of rubber while Indonesia has set a
limit of 1.23 million tons and Malaysia will cap its export
volume at 227,000 tons.

Combined natural rubber production from the three countries
represents around 80-85 percent of global rubber supplies.

The three countries also plan to form a US$225 million new
joint venture company this year to help jack up the rubber price.

The planned International Tripartite Rubber Council, or ITRC
would buy excess stock and hold it from the market.