World's natural rubber price may increase to US$1.20

World's natural 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.