Many leading natural rubber manufacturers in Indonesia has become some of the world’s largest rubber suppliers as the natural rubber industry in the country continues to thrive. Despite the global rubber market currently experiencing oversupply with slowing-down demand, particularly from China—which is the largest buyer of rubber in the world—Indonesia still holds the title of the world’s second largest rubber supplier after Thailand. Business opportunities in Indonesia’s rubber industry are expected to remain lucrative through 2018.
In the global landscape, the rubber market is still in huge demand, driven by rapidly growing downstream sectors from industries such as the tire industry and the consumer product industry. The latest rubber industry report shows that the global natural rubber output increased 1.1% year on year to 12.4 million tons in 2016, while the global rubber consumption rose by 3.8% year on year to 12.6 million tons, indicating the gap of 200,000 tons between rubber demand and supply. While Thailand is ranked as the largest natural rubber producer in 2016 with the total output of 4.5 million tons, Indonesia is the world’s second-largest rubber supplier.
According to the latest report from Indonesia Investment, Indonesia’s total natural rubber production was estimated to be 3.16 million tons in 2016, increased by 1.6% from previous year. The rising output comes on the back of an increase in the size of Indonesia’s rubber plantations and an increase in productivity at the existing plantations. The size of Indonesian rubber plantations rose from 3.62 million hectares in 2015 to 3.64 million hectares in 2016, while the rubber productivity of plantations rose from 1.04 ton per hectare to 1.05 ton per hectare over the same period.
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. Close to 85% of the rubber producers in Indonesia are smallholders, and they contribute 81% to the national output.
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Compared to its rubber producing competitors, Indonesia suffers from a low level of productivity per hectare. This is in large part due to the general older age of its rubber trees in combination with low investment capability of the smallholder farmers. In comparison, Thailand produces 1,800 kilograms (kg) of rubber per hectare per year, Indonesia only manages to produce 1,080 kg/ha. Also, Vietnam (1,720 kg/ha) and Malaysia (1,510 kg/ha) have higher rubber productivity.
When it comes to the downstream sectors, Indonesia is one of the world’s major rubber glove producers. Indonesia also produces approximately 51 million tires per annum out of which 70% is exported primarily to the Middle East and North America. The regions Java and Sumatra are the largest contributors to the tire market in the county. It is projected that the Indonesian tire market will grow at a CAGR of approximately 13% during the period 2015-2020. Rubber manufacturing plants in Indonesia are expected to continue producing at a comparable to rate to anyone else in 2018 and going forward.
Currently, around 85% of Indonesia’s rubber production is exported. In 2016, Indonesia exported over US$3.3 billion worth or equivalent of 2.6 million tons of natural rubber to the global market, making it the world’s second-largest rubber exporter. Every year, almost half of its rubber export is shipped to other Asian countries, followed by North America and Europe. The top five Indonesian rubber importing countries are the USA, China, Japan, Singapore, and Brazil. Domestic rubber consumption is mostly absorbed by Indonesia’s manufacturing industries.
In order to further boost the country’s rubber industry through 2018, the government of Indonesia is planning to enlarge the rubber producing plantation across the country, so that the rubber production can comply with the rising domestic demand as well as the growing export. Indonesian Industry Ministry expects the plantation area to reach a million hectares from 3.6 million hectares by the end of 2017. In terms of exports heading into 2018, rubber manufacturing companies in Indonesiexpectedtected to continue thriving.
The prominence of the rubber industry in Indonesia has attracted a significant number of buyers and traders from all over the world. To help your rubber business stays at the top of the industry, BizVibe provides the best solutions to source the products and make the best business deals with the top rubber manufacturers in Indonesia. Don’t miss your chance to connect with the best industry suppliers, manufacturers, and Thailand rubber companies on BizVibe.
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