Rubber price may increase to US$1.20

Sari P. Setiogi, The Jakarta Post, Jakarta

The price of natural rubber on the global market could increase to US$1.20 per kilogram by the middle of this year from $0.90 at present, as world demand grows and supply declines.

Rubber Association of Indonesia (Gapkindo) chairman Asril Sutan Amir said on Tuesday the increased demand would come mostly from China, Japan, Taiwan and South Korea.

This year, some Asian automotive companies are expected to increase their production, which would increase the demand for natural rubbers for tires. This, in turn, would cause the price of natural rubber to rise, Asril said.

"In the meantime, the stock level of rubber in consumer countries is low, giving producer countries the privilege of setting prices," he said.

Asril said rubber plantation areas in Indonesia would decrease to 3.1 million hectares this year from 3.24 million hectares in 2002.

"Farmers are not patient enough to grow slow-yielding rubber trees, preferring oil palm trees," he said.

In August 2002, the world's largest rubber producers -- Indonesia, Malaysia and Thailand -- signed a memorandum of understanding on the establishment of the International Tripartite Rubber Companies Consortium, whose main duty is to help boost the sagging price of the commodity.

Under the council's framework, the three countries agreed to cut rubber output by 4 percent and rubber exports by 10 percent starting last year.

In 2002, Indonesia lowered its rubber exports to 1.23 million tons, while Thailand limited its exports to 1.93 million tons and Malaysia 227,000 tons.