Published on December 13, 2013

Indonesian group calls for NR production cut

JAKARTA (Dec. 13, 12013) — Daud Huani Bastari, chairman of the Indonesian Rubber Association that’s also known as Gapkindo, is calling on natural rubber (NR) producers in Indonesia and elsewhere to cut NR production by 10 percent in an effort to shore up prices.

According to news reports from Jakarta, Mr. Bastari said Dec. 3 he had sent a letter to Gapkindo members urging them to reduce production in 2014. He said rubber growers haven’t benefited from higher tire prices, and have seen their cost of living gone up while NR prices have lagged behind.

NR futures were down almost 10 percent on the Tokyo Commodity Exchange earlier in December, but rebounded by Dec. 11 thanks to massive NR purchases from China and optimism that the global economy is rebounding.

This is not the first time Southeast Asian rubber producers have reduced supply to raise prices. Between August 2012 and March 2013, Thailand, Indonesia and Malaysia adhered to a pact to cut NR shipments by 300,000 metric tons.

This is one of many proposals to cut NR production to bolster prices, according to a source close to the natural rubber trade.

“But what are the chances of one national organization getting all those producers to cut production?” the source asked. “Whether it’s feasible is kind of doubtful.”

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