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.