Monday, November 10, 2008

Indian, Thailand and Malaysia to Reduce Rubber Output

Rubber Association of IndonesiaIndonesia said, has agreed to join with Thailand and Malaysia to cut rubber output. As a result of the buyers default, including China, the delay in export will up to 2 months.

According to Bloomberg News, the world's second largest rubber producer Indonesia will replante 55,000 hectares of trees to reduce the rubber output in the next year.

Daud Husni Bastari, the President of the Rubber Association of Indonesia said that the replanting measures will reduce the rubber production of 55,000 tons in Indonesia. This is approximately 2% of Indonesia last year's output.

The three countries plan to replant an area of 169,000 hectares. There are 55,000 hectares in Indonesia, 64,000 hectares in Thailand and 50,000 hectares in Malaysia.

The three countries annual harvest about 7 million tons of rubber. There are approximately 6 years from the tree planting to harvest for the first time. In the next 20 years, the tree could output rubber. The aims of replanting is to cut down trees on Aging. Before the new trees' mature, which would help to prevent the world's rubber supply. Other measures include the reduction of output for each rubber trees, or delay cutting rubber.

According to the report from Thailand, Malaysia, Cambodia, Vietnam, Singapore and Indonesia, the non-compliance of purchase have achieved in the number of 60,000 to 80,000 tons, most of them are from China. Some buyers have asked for a postponement of shipping, which are one or two months. There are many rubber exporters canceled shipment, in particular those of the originally plan to China's rubber cargo, because the buyers did not open a L/C.

Rubber prices have fell 50 percent from a high peak of 28 years in last 5 months. The market worried about the global financial crisis will make the global economy into recession, thereby reduce demand of goods.

Originally Posted: China Business Daily
Author: Angulo Fu