Indonesia to Cut Rubber Export Volume

The world’s three largest rubber producing countries Indonesia, Thailand, and Malaysia, have agreed to start reducing rubber exports. As members of the International Tripartite Rubber Council (ITRC), the three countries decided on this policy to boost rubber prices in the global market.

The Indonesian Rubber Companies Association (Gapkindo), the government’s official partner in implementing the ITRC agreement, said that members have been reducing the number of product shipment overseas.

“We have cut back on crumb rubber exports to comply with regulations,” Gapkindo executive director Suharto Honggokusumo Suharto said in Jakarta, yesterday.

The agreement to cut rubber exports was made on February 4, 2016. The ITRC will cut export volume by 615,000 tons starting on March 1 until August 31, 2016. Thailand will lower its exports by 324,025 tons, Indonesia by 238,736 tons, and Malaysia by 52,249 tons.

In Indonesia, the unexported volume will be reallocated to the domestic market, including for infrastructure projects. “The government has promised to seek price improvement to help improve the condition of the rubber farmers,” said Suharto.

In 2015, Indonesia’s natural rubber exports reached 2.6 million tons. Trimming the volume of exports is expected to push up prices. In February, the price of natural rubber in the global market was US$1.04 to US$1.09 per kilogram. This price range is too low, because farmers can only profit if global prices are between US$2 and US$3 per kilogram.