Rubber To Average $4.5/Kg In 2011, Above Last Year by GAPKINDO

Rubber prices will average $4.5 per kg this year as producers try to take advantage of relatively high prices, the Indonesian Rubber Association (Gapkindo) said on Friday (Apr 15), above last year's average.
Indonesia, the world's second-largest rubber producer, will produce an estimated 2.972 million tonnes of rubber this year, versus 2.736 million tonnes last year, Asril Sutan Amir, chairman at Gapkindo told a news conference.
"High rubber price has encouraged farmers to over tap the rubber trees," Amir said. "It is still relatively high."
Prices of physical Indonesian SIR20 rubber have dropped more than a third since striking a record above $6 per kg in February, as economic concerns sparked by the Middle East unrest and worries about the impact of the March 11 earthquake in Japan countered tight supply.
News such as Toyota Motor Corp's decision to build cars at half the rate of its original plans in Japan at least until June 3, which would cost the world's top automaker another 120,000 vehicles in lost production, continued to dampen rubber prices.
Top producers Thailand, Indonesia and Malaysia threatened to take action to prop up prices in March, when tyre grades plunged.
But this year's average prices for the tyre-grade rubber would still be higher than last year's $3.11 a kg.
"There was a shift of Indonesian rubber export destination from Japan to China in the last three months, but the volume is very small, only around 10,000 tonnes, he said.
Annual shipments of Indonesian rubber to Japan total 400,000 tonnes, Amir said.
Last month, Gapkindo told Reuters that rubber output in Southeast Asia's largest economy, would rise between 6 and 8 percent this year.
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 in March.
Dealers say this was in part due to a recovery in the automotive sector, though that had not factored in the plight of the Japanese automakers. 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.
Amir said Indonesian rubber consumption this year would be 460,000 tonnes, in line with the 10 percent rise offered in the March interview.
He said several tyre makers were expanding their factories.
Indonesian rubber exports will be 2.45 million tonnes this year, up from 2.352 million tonnes in 2010, Amir added.
(Reuters, April 15, 2011)