Indonesia Rubber Output Seen Up Over 20pct at 3.6 Mil Tons

Indonesia, the world's second-largest rubber producer, will boost its output by more than 20 percent to 3.6 million tonnes by 2015, the Indonesian Rubber Association (Gapkindo) said on Tuesday (Mar 22).
Within five years, domestic consumption of rubber in Southeast Asia's largest economy should jump to 20 percent of total production, Suharto Honggokusumo, executive director of Gapkindo told Reuters.
Indonesia produced 2.8 million tonnes of rubber in 2010, and Honggokusumo sees this rising between 6 and 8 percent this year.
The La Nina weather anomaly caused unusually heavy rains this year in Indonesia, including during the usual dry season, hitting output of many commodities.
"Before 2007, the (annual percentage) increases were around 10 percent," he said. "This is our ability. The economic situation is getting better in 2010.
"We need to improve the quality and increase the production in 2011," he added.
Indonesia's domestic rubber consumption was 422,000 tonnes in 2010, and Honggokusumo sees a 10 percent increase this year.
"This is normal, like in China, the economic growth is very fast," he said. "Everybody wants to have a better life -- from bicycles to motorbikes, then to cars."
"We need to increase the local consumption," he added. "In 2015 we would like to have 20 percent of production consumed locally."
Global demand for rubber, both natural and synthetic, is forecast to rise to 26.1 million tonnes in 2011 from 24.4 million tonnes in 2010, the International Rubber Study Group said earlier this month.
Dealers say this is in part due to a recovery in the automotive sector. The U.S. auto industry snapped a four-year sales decline in 2010, including three consecutive months of sales above the 12 million-unit annual rate.
Tokyo rubber futures, which set global trend, jumped to a two-week high on Tuesday (Mar 22) to finish at 433.9 yen ($5.35) per kg on supply concerns.
"The trend of the rubber price is high," he added.
Rubber prices hit record highs in mid-February but have plunged this month as doubts grew over demand and the global economy, in reaction first to unrest in the Middle East and then to last week's devastating earthquake in Japan.
"It is not good for both buyers and producers," said Honggokusumo, who was unable to give an average price forecast for 2011. He added that almost 86 percent of Indonesian rubber plantations belong to small-holder farmers.
The Thai government said on Monday (Mar 21) however, that it would not intervene in the domestic rubber market at this point as prices had rebounded to a level farmers were satisfied with.
Traders had said the government could intervene directly in the market and buy rubber that it would stockpile. Top exporter Thailand produces about a third of the world's natural rubber.
Honggokusumo said the Indonesian government was unlikely to intervene to support rubber prices.
On the Japanese earthquake and tsunami, which spurred a nuclear crisis, Honggokusumo said he had not heard of any cancellations or postponements of deliveries to Japan.
Japan accounts for 7 percent of global demand for natural rubber.
"It is business as usual," he added. "I don't think there is a major impact for us."
Having just returned from a rubber industry event in China, Honggokusumo sees the world's second-largest economy leading demand for years to come.
"They need more rubber," he said.
(Forexyard, March 22, 2011)