Indonesia to Cut Rubber Export Volume

1 min readUpdated May 28, 2025Mar 16, 201610:55 PM

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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.

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What this means

This aggressive export cut by the ITRC, aiming for a significant price hike from US$1 to US$2-$3 per kilogram, presents a high-stakes gamble. While it offers a potential lifeline to rubber farmers, it simultaneously pressures retail sectors reliant on rubber components, potentially increasing manufacturing costs. Diverting unexported volume to Indonesia's domestic market for infrastructure could cushion the blow locally but offers little relief internationally. This mirrors earlier ITRC attempts to stabilise prices by managing supply, though the scale here is more pronounced. The immediate risk is a failure to achieve the desired price bump, leaving producers with reduced export revenues without higher unit profits. Watch natural rubber prices closely post-August 31, 2016.

Aiko Tanaka

Questions & Answers

Which countries are involved in this agreement to cut rubber exports?

The agreement includes Indonesia, Thailand, and Malaysia. These three nations are the world's largest rubber producers and are members of the International Tripartite Rubber Council (ITRC).

What is the total volume of rubber exports that will be cut under this agreement?

The International Tripartite Rubber Council (ITRC) plans to cut export volume by a total of 615,000 tons. This reduction will occur between March 1 and August 31, 2016.

What will happen to the unexported rubber volume in Indonesia?

In Indonesia, the volume of rubber that is not exported will be reallocated to the domestic market. This includes plans for its use in various infrastructure projects within the country.

What was the global market price for natural rubber in February, and why is this a concern?

In February, the global price of natural rubber was between US$1.04 and US$1.09 per kilogram. This range is considered too low, as farmers only achieve a profit when prices are between US$2 and US$3 per kilogram.

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