Indonesia rubber group calls for 10 pct cut in output

Reuters

* Indonesia's GAPKINDO targets 10 pct cut next year vs 3.1mln T in 2013

* Urges other SE Asia countries to reduce output levels

* Says action needed by all SE Asia producers to cut stocks

* Vietnam, Malaysia not likely to cut output - officials

By Michael Taylor

JAKARTA, Dec 3 (Reuters) - Indonesia's main rubber groupingis calling on the world's second largest producer to cut outputnext year by 10 percent, while urging other Southeast Asiarubber-growing countries to do the same to reduce global stocksand support prices.

Tokyo rubber futures, which set the tone forphysical rubber prices in Southeast Asia, have dropped nearly 10percent this year on concerns about the global economy and asregional supplies have swelled.

Rubber inventories in world top consumer China monitored bythe Shanghai Futures Exchange fell more than 10 percent lastweek, but remain at near nine-year highs.

"Last month I issued a letter to our members to reduce theproduction next year by 10 percent," Daud Husni Bastari,chairman of the Indonesian Rubber Association (GAPKINDO), toldReuters on Tuesday.

"We would like to send a message to the big tyremanufacturers," said Bastari, whose association includes rubberprocessing factories, plantations, co-operatives and traders.

Rubber producers and farmers need higher prices for theirproduct, Bastari said, because their cost of living has gone upbut they haven't benefited from steady or higher tire prices.

GAPKINDO is the biggest and most influential of rubberindustry groups in Indonesia.

Indonesia's 2013 rubber output will be little-changed at 3.1million tonnes, Bastari said, with gains hampered by wet weatherand curtailed by an earlier agreement with fellow producersThailand and Malaysia to trim exports.

The earlier agreement ran from August 2012 to March of thisyear, with the three largest rubber producers agreeing to cuttheir exports by a total 300,000 tonnes.

The impact on prices was short-lived, but Thailand stilltried to extend the agreement for two more months beforeabandoning it at the end of May.

Indonesia, Thailand and Malaysia account for about 70percent of world output, with major tyre makers that includeBridgestone Corp, Michelin and Goodyear Tire& Rubber Co taking most of their output.

VIETNAM, MALAYSIA

Given the growing emergence of other Asian rubber producers,like Vietnam, earlier this year Bastari said a group of rubberproducing countries within the Association of Southeast AsianNations (ASEAN) would achieve the best results in any futurepricing support effort.

"It should be an effort together," said Bastari, who is alsochairman of the ASEAN Rubber Business Council (ARBC) - agrouping of Cambodia, Indonesia, Malaysia, Singapore, Thailandand Vietnam.

Bastari said associations in Thailand, Malaysia, Vietnam,Laos and Cambodia will be asked to join Indonesia in the outputcuts for next year.

Officials at the Malaysian Rubber Board and the Malaysia'splantation industries ministry said they had not heard of anysuggestion for rubber production cuts from Indonesia.

The matter could be discussed at a planned meeting withASEAN producers early next year, they said.

"At this junction, there is no active measure to cut output.At the moment rubber output in Thailand, Indonesia and Malaysiais still below the target that we have set for ourselves," saidan official with Malaysia's plantation industries andcommodities ministry.

"In Malaysia's case, we are cutting down old andunproductive trees and launching replanting programmes, as wellas looking to enhance productivity," the official added.

Vietnam, the world's third-largest natural rubber exporterafter Thailand and Indonesia, aims to keep its rubber outputnext year unchanged at around 1 million tonnes, a rubberindustry official said.

But "we will try not to apply measures for raising yieldsand also avoid new investment in rubber plantations," said theofficial, who declined to be identified by name as he was notauthorized to speak to the media.

(Additional reporting by Ho Binh Minh in HANOI and AnuradhaRaghu in KUALA LUMPUR; Reporting by Michael Taylor; Editing byTom Hogue)

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