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This year there are less factors to cite which could reduce
the price of natural rubber, with many signs pointing toward the
commodity climbing up the chart.
A higher demand for automotive products, intensive global campaigns for
the use of environmentally friendly materials, poor climatic conditions
which reduced the rubber harvest and higher oil prices all contributed
to push the price up.
Gapkindo chairman Daud Husni Bastari said the global demand for natural
rubber is set to rise by at least 5 percent this year, to more than 9.5
million tons. Since 2001, the demand has increased by an average 4.72
percent annually.
"The rapid growth of automotive industries in developing countries will
bring increased demands for rubber. Aside from China and India, rubber
will also be in demand in Eastern Europe and Latin America," Daud said.
Rubber is mainly used in automotive industries as a raw material for
making tires. Tire firms often use a combination of natural and
synthetic rubber, because synthetic rubber is made from oil and is
cheaper.
"Nowadays, there is a tendency that tire companies use more natural
than synthetic rubber in their formula, out of concerns for the
environment. I guess in future natural rubber will be used more in
tires," Daud said.
Next year, Gapkindo expects the price of technically specified rubber
will be more than US$2 per kilogram. At present the price hovers at
around $2 to $2.2 per kilogram.
This year, rubber producers may also face unexpected extreme climate
change, which threatens to significantly reduce rubber crops from major
producing countries such as Indonesia, Thailand and Malaysia.
A crop shortage of this kind would automatically increase the price of
rubber on the global market.
Higher oil prices would also contribute to the volatility of rubber
prices since it would affect the production of synthetic rubber. This
would increase the demand on natural rubber to balance the higher price
of synthetic rubber.
"Oil prices will definitely affect the volatility of the rubber prices.
As long as oil prices stay higher than the price of natural rubber the
conditions will be favorable," said Azrul Latif, investment relations
officer for publicly listed rubber plantation company PT Bakrie
Sumatera Plantation.
Rubber is mainly traded on Tokyo's TOCOM and Singapore's SICOM
commodity markets.
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