Gapkindo warns of rubber price slide

Gapkindo warns of rubber price slide

Adianto P. Simamora, The Jakarta Post, Jakarta

The Indonesian Rubber Producers Association (Gapkindo) warned
the rubber price would fall if Thailand sells its stockpile of
130,000 tons.

"If the government of Thailand sells its entire stockpile,
there will be an abundant supply in the market and I predict it
will force the rubber price down to 60 cents per kilogram,"
Gapkindo chairman Asril Sutan Amir told reporters on Friday.

He said news that Thailand was starting to unload its
stockpile had weakened the rubber price in the past week to 75
cents, from the previous price of 89 cents per kilogram.

Thailand's Deputy Agriculture Minister, Prapat Panyachatirak,
was quoted by Reuters as saying it has sold off its stockpile of
130,000 tons of RSS 3 rubber sheet at $825 per ton.

Asril admitted the association had not received any
confirmation from the Thai government over the news.

"If this (sale) really happens, plans to prop up the rubber
price to US$1 in September will be difficult to fulfill and it
will add to the misery of (rubber) farmers," Asril said.

He said that the sale would break an earlier deal signed by
Thailand, Indonesia and Malaysia to form a cooperation to help
boost the rubber price to the $1 level, after the price plunged
to a 30-year low of less than 50 cents per kilogram late last
year.

The three countries are the world's top rubber producers,
which jointly account for around 85 percent of the world's
natural rubber production.

Asril said there was a temptation for the countries to sell
their rubber stockpiles as the price of the commodity had been on
the rise recently.

The three countries formed the International Tripartite Rubber
Council (ITRC) in December last year in Bali.

Under the ITRC framework, the three countries have pledged to
cut rubber output by four percent and exports by ten percent
starting this year.

For 2002, Indonesia will lower its exports to 1.23 million
tons, while Thailand has set a limit at 1.93 million tons and
Malaysia will cap its export volume at 227,000 tons.

In addition, the three countries also established a $225
million joint rubber consortium to buy rubber from the market in
a bid to push up the price.

Thailand, as the biggest rubber exporter, has agreed to
contribute some $25 million; Indonesia, the second biggest rubber
exporter, will contribute $18.75 million; and Malaysia will give
$12.5 million.