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08. February 2020

INDONESIA: Rubber price drops as coronavirus outbreak disrupts exports to China

Producers are beginning to feel the pinch as the price of rubber, a key Indonesian export commodity, has dropped sharply in the wake of the coronavirus outbreak. The price of rubber fell from IDR 9,200 to IDR 7,200 per kilogram over the past few weeks as the virus affects trade between Indonesia and China.

Qolbi, one of many farmers in Prabumulih of South Sumatra who depend on rubber for their livelihood, said the price drop had started to hinder his ability to meet daily needs. With rubber being the region’s main product, he said he had no alternative source of income to rely on. “The price has dropped in these last two weeks,” he said, as quoted by tribunnews.com.

Prabumulih Agriculture Agency head Syamsurizal said the rubber price drop was driven by China’s coronavirus outbreak, which he said affected both imports and exports. “Rubber exports to China are [reduced],” Syamsurizal said. He declined to predict how long the situation might last, saying only that he hoped the outbreak would soon end, so that the rubber price could get back to “normal”, with any price below IDR 10,000 per kg considered abnormal.

Previously, the head of the plantation product processing and marketing division at the South Sumatra Agriculture Agency, Rudi Arpian, noted that China was the dominant buyer of rubber in the world. “Nearly 40 percent of this rubber output goes to China. Thus, because [demand] is now declining due to the virus, it is difficult for factories to market their rubber,” said Rudi as quoted by tribunnews.com. Rudi added that the rubber price drop would impacts plantation workers in multiple ways, because lower rubber prices would result in lower labor fees. The coronavirus, which has killed hundreds of people in China and spread to more than 20 countries, has begun to take a toll not only on Indonesia’s tourist industry but also on commodity exports.

Indonesian Employers Association (Apindo) chairman Hariyadi Sukamdani said on Monday (3 February 2020) that palm oil was also among the commodities affected, as the virus outbreak had caused a delay in shipments of the commodity to China, one of the major buyers of Indonesia’s palm oil. “From us to them, it is mostly commodities, such as crude palm oil and minerals. These exports have been affected,” said Hariyadi. “Meanwhile, our imports from China, most of which are manufactured products and household goods, have all slowed.” He added that businesses were looking at other markets to replace China, but that was challenging, as the economic superpower offered competitive prices.

Source: Daily “The Jakarta Post”, Jakarta; 5 Feb 2020
(Syed Rashid Ali, Karachi, Pakistan)

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