North Sumatra's Rubber Exports Slump Amid Tight Raw Rubber Supply
Medan, March 26, 2024 — North Sumatra's natural rubber exports continued to weaken, reflecting increasingly tight supplies of raw rubber materials that have constrained production at the region's processing industry.
According to Edy Irwansyah, Executive Secretary of the North Sumatra Branch of the Indonesian Rubber Association (Gapkindo Sumut), natural rubber exports from the province totaled 20,285 metric tons in February 2024, representing a 21.37% month-on-month decline compared with January.
On an annual basis, export volume was 26.28% lower than in February 2023.
"Compared with the historical monthly average of around 42,000 tons, it is evident that our rubber export performance continues to weaken," Edy said on Tuesday.
He explained that the decline was primarily caused by increasingly limited supplies of raw rubber materials (Bokar), the key feedstock used by Indonesia's rubber processing industry, particularly for the production of crumb rubber.
According to Edy, several factors have contributed to the shrinking Bokar supply, including the continued conversion of rubber plantations to other crops and the impact of the dry season, which has pushed North Sumatra's rubber production into its annual low-output period.
"The situation has become even more severe because imports of raw rubber materials from Africa have been banned. Only limited volumes remain available to fulfill existing contracts," he said.
Japan Remains the Largest Export Destination
Gapkindo North Sumatra reported that the province currently exports natural rubber to 28 countries.
As of February 2024, the five largest export destinations were:
Japan: 32.25%
United States: 9.87%
Canada: 9.05%
Brazil: 7.35%
Türkiye: 7.16%
Rubber Prices Improve Despite Supply Constraints
Despite weaker export volumes, international rubber prices showed signs of improvement during March.
The average TSR20 price on the Singapore futures market reached US 151.95 cents/kg during February. By March 25, the monthly average had increased to US 164.22 cents/kg, an improvement of 8.72 cents/kg compared with February.
According to Edy, the price recovery has been driven primarily by tightening raw material supplies, both in Indonesia and in other major natural rubber-producing countries.
However, he noted that the higher prices have provided only limited benefits for rubber farmers because latex production has fallen sharply during the dry season.
"Raw rubber production is expected to remain under pressure throughout March as we are currently experiencing the seasonal peak of declining output," he concluded.