Price Continue to be Depressed, Rubber Businessman Restrict Export

The secretary of North Sumatra's Indonesian Rubber Association (Gapkindo), Edy Irwansyah, said that representatives from countries participating in the International Tripartite Rubber Council (ITRC), namely Indonesia, Malaysia, and Thailand, were holding a meeting with the main agenda of reducing export volume or what is known as the Agreed Export Tonnage Scheme (AETS) in Bangkok, Thailand.The main agenda in the meeting was to reduce export volume. It is hoped that there will be a good agreement to maintain the price of rubber, which is currently dropping. `Export restrictions will be taken as a step to strengthen the price,` he said to reporters in Medan on Thursday (28/1).That said, he was not able to say how much export restriction would be taken because he was still waiting for the results of the ITRC meeting. In order to attend this ITRC meeting, he further said, Gapkindo as a whole does not need to have a special meeting to decide which volume of export from Indonesia would be reduced. The entire decision has been left to the chairman of the central Gapkindo as the representative.The last time ITRC decided that export volume would be reduced in October 2012 for six months until March 2013. With that agreement, the price of rubber was able to reach US$ 3.03 per kg, after having previously dropped to US$2.6 per kg. It is hoped that this year's meeting will have a similar effect on the price of rubber.When asked why ITRC is only now reducing the export volume even though the price has been decreasing for the last two years, Edy explained that the demand for rubber has also not been good, so if the main producing countries reduce exports, it will certainly be even more difficult for the industry and farmers.In the past two years the demand for rubber has decreased, pushing the price downward. It was a rather difficult situation to adopt a policy of reducing exports. `However, after seeing world developments and projections for growth from importing countries this year, particularly in China and the United States, which estimates it will not get any worse, ITRC is once again thinking about implementing export restrictions,` he explained.Based on data from North Sumatra Gapkindo, the total volume of exports from North Sumatra in 2015 was 436,197 tons. This is a small increase over 2014, which amounted to 451,457 tons. This decrease in rubber export performance was caused by a lack of demand from a number of major customer countries. The price of rubber today is still hovering at a low level, between US$1.07 and US$1.10 per kg.North Sumatran economic observer Gunawan Benjamin assessed that efforts to boost the price of rubber this year will face serious challenges. One major hurdle in this effort is the low price of oil in the world. `Demand for natural rubber is predicted to decline,` he said.As a consequence, even if companies or exporters take action to restrict export volume, it will not have much influence because demand is decreasing. The price of rubber in the market is predicted to remain flat. If an increase occurs, it will be difficult to reach the level of US$1.5 to US$2 per kg. `In the current context, domestic consumption needs to be increased so that industries can get moving again,` he said pointedly. (daniel pekuwali)
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