Indonesian Rubber Industry Analysis, Forecasts and Opportunity Assessment (2016-2023)

Report on Indonesian Rubber Industry Analysis, Forecasts and Opportunity Assessment (2016-2023)

Introduction to Indonesian Rubber Industry

93% of the world’s natural rubber production takes place in Asia with Thailand being the largest producer. Indonesia is the second largest natural rubber producer in the world followed by Vietnam. Rubber consumption is going to increase by 4.8% per annum compared to 3.9% per annum globally. More number of developing economies in Asia indicates more rubber consumption. Rubber is mainly used in manufacturing tyres referring to the increase in use of automobiles.

The country exports two key types of rubber exported out of Indonesia is natural rubber – produced from the latex of the rubber tree, and synthetic rubber – a mixture of natural rubber with substance such as petroleum. Sumatra is the key natural rubber producing area in Indonesia accounting for two-thirds of the rubber latex harvested followed by Kalimantan, Sulawesi and Java.

The value of Indonesia’s rubber exports has decreased by 20.7 percent since 2012, while export volumes have stayed relatively steady. According to data from the Central Statistics Agency, Indonesia exported 2.44 million tons of rubber worth $7.86 billion in 2012, while in 2017, Indonesia exported 2.77 million tons with a value of $4.77 billion.

Market Dynamics

Over the years, the price of rubber, like most commodities, declined from as high as US$5 per kilogram in 2011 to as low as $1.2 in 2015 due to the global production surplus and declining demand, notably in China.

In the beginning of 2018, International Tripartite Rubber Council (ITRC), which consists of Indonesia, Thailand and Malaysia, implemented an agreed export tonnage scheme (AETS) which would reduce the natural rubber export volume by 350,000 tons for three months, from January to March 2018. This resulted in 5 percent rise in prices of natural rubber. Average price for natural rubber increased from US$ 1.46 on Dec 2, 2018 to US$ 1.54 on Jan 31, 2018.

Despite the moderate price rise generated by the AETS scheme, most rubber farmers in Indonesia continue to earn only half of what rubber growers in Thailand, the world’s largest producer, and Malaysia, the third largest producer, enjoy. This has created a huge concern in the minds of farmers as well as government of Indonesia. Are the demand for rubber from Thailand and Malaysia more compared to Indonesia or the quality of rubber of Indonesian rubbers are inferior, are two major questions still remains to be answered.

Synthetic rubber type is likely to gain popularity in industrial rubber market and surging automotive sector is expected to drive the sales of this product. Demand for light-weight vehicles, fuel-efficiency and environment-friendly automotive components has been influencing automotive industry in adopting eco-friendly industrial rubber.

Market segmentation

The major market segmentation would be on the basis of consumer of natural rubber. Based on market, the global industrial rubber market is segmented into:

 

  1. Construction
  2. Manufacturing
  3. Aerospace
  4. Automotive
  5. Medical

Automotive, building & construction, industrial manufacturing, polymer modification, wire & cable, electrical & electronics, bitumen modification, coating, sealant, & adhesive, medical & healthcare, and other such applications are some significant consumers of rubber. Automotive alone consumes more than 65% of total rubber produced.

There are three types of rubber that Indonesia produces and exports:

  1. Concentrated Latex
  2. Ribbed Smoked Sheet
  3. Technically Specified Rubber (96.7% of total rubber exports)

Geographic analysis

The largest producer of rubber in the world is in Asia. Since Asia has the largest number of developing economies the automotive, construction etc. would grow at a faster rate. Therefore, the consumption of rubber in the tyre industry would also increase.

The industrial rubber market is expected to witness significant growth in a number of emerging economies, such as India, Thailand, Malaysia, and Brazil.

The developed nations are trying to move towards more ecological form of rubber (synthetic) to minimize their dependence on natural rubber. Rather than importing, manufacturing synthetic rubber in their own country is a preferred option. Moreover, their economic growth rate would remain relatively sluggish.

Key Players

The key players are:

  1. Leading Importers (China, US)
  2. Government of Indonesia
  3. International Tripartite Rubber Council (ITRC)
  4. Developing Economies such as India, Brazil, China etc.
  5. Major synthetic rubber manufacturer (China)

Major Trade Partners

The major trading partners of Indonesia’s rubber are:

  1. USA
  2. China
  3. Singapore
  4. Japan
  5. Brazil

USA accounts for about 22% of the rubber imports from Indonesia.

The report contains comprehensive analysis on:

  • Indonesian Rubber Industry Segments
  • Indonesian Rubber Industry Drivers, Restraints and Opportunities
  • Supply & Demand Value Chain
  • Indonesian Rubber Industry Current Trends
  • Competition & Major Companies
  • Technology and R&D Status
  • Strategic and Critical Success Factor Analysis of Key Players

Regional and global analysis for Indonesian Rubber Industry includes

  • Indonesia
  • ITRC (Thailand, Malaysia)
  • China
  • Emerging economies
  • Shift to synthetic rubber

Report Highlights:

  • Detailed Historical Overview (Market Origins, Product Launch Timeline, etc.)
  • Consumer and Pricing Analysis
  • Market dynamics of the industry

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