Prices for commodities from natural rubber to coal have plunged in February because of decreasing demand from China, where the new coronavirus outbreak is expected to further drag down prices.
The chairman of the South Sumatra chapter of the Indonesian Rubber Producers Association (Gapkindo), Alex K. Eddy, said fear over the Wuhan coronavirus was weighing on what was already slow economic activity in the East Asian country during the Chinese New Year holidays and weak global natural rubber prices in January.
"I think the impact of [the Wuhan coronavirus in Indonesia] has really been felt through the current price decrease," Alex told The Jakarta Post in Palembang, South Sumatra, in late January.
South Sumatra Plantation Agency data show that prices of 100-percent natural rubber fell by about 5 percent to Rp 16,290 (US$1.19) per kilogram on Jan. 24 from Rp 17,151 per kg on Jan. 20, while 60-percent natural rubber showed a similar decline.
Rubber, coal and palm oil are among Indonesia’s main export commodities and contribute a big chunk to the country’s foreign exchange earnings.
“The spread of the virus lowers demand while China is the world’s largest natural rubber importer,” said South Sumatra Plantation Agency processing and marketing head Rudi Arpian.
The 2019-nCoV virus has infected more than 24,500 people worldwide since it was first discovered in the Chinese city of Wuhan, with the death toll standing at 492 on Wednesday afternoon. Several countries, including Indonesia, have closed their doors to visitors from China to prevent the pneumonia-like illness from spreading, while many companies in China have suspended or curtailed business activities amid lockdowns in several cities.
South Sumatra Plantation Agency data show that prices of 100-percent natural rubber fell by about 5 percent to Rp 16,290 (US$1.19) per kilogram on Jan. 24 from Rp 17,151 per kg on Jan. 20, while 60-percent natural rubber showed a similar decline.
Rubber, coal and palm oil are among Indonesia’s main export commodities and contribute a big chunk to the country’s foreign exchange earnings.
“The spread of the virus lowers demand while China is the world’s largest natural rubber importer,” said South Sumatra Plantation Agency processing and marketing head Rudi Arpian.
The 2019-nCoV virus has infected more than 24,500 people worldwide since it was first discovered in the Chinese city of Wuhan, with the death toll standing at 492 on Wednesday afternoon. Several countries, including Indonesia, have closed their doors to visitors from China to prevent the pneumonia-like illness from spreading, while many companies in China have suspended or curtailed business activities amid lockdowns in several cities.
Indonesian Palm Oil Association (GAPKI) chairman Joko Supriyono expressed concern that the virus spread would hurt China’s economy and thus hit palm oil demand.
The country exported 4.4 million tons of palm oil to China in 2018, making the East Asian country its third-biggest buyer, after India and the European Union.
"Our exposure to China is quite large. If [the Wuhan coronavirus outbreak] is only temporary, then there's hope to grow," Joko said at a press conference on Monday.
Source Jakarta Post