Indonesian tyre manufacturer Gajah Tunggal says its rubber purchasing could rise by around 10% this year to 80,000t as sales increase 30% according to Reuters.
The firm bought 70,000t last year from Indonesia, the world’s second largest rubber producer and where demand for tyres is rising as car and motorbike sales could reach record levels again this year.
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“It will be around a 10% increase,” Christopher Chan, the firm’s chief executive, told Reuters. “So we will see maybe around 77,000t -the maximum is 80,000t.”
Chan estimated the company’s turnover increasing to US$2bn by 2016, after reaching US$1bn last year for the first time. “This year it will maybe be US$1.2bn – US$1.3bn,” Chan added.
Gajah Tunggal sources all its rubber from Indonesia, Reuters noted, using mostly annual contracts and is increasingly evaluating the domestic market given rising consumer spending, said Chan.
The firm sells all of its motorcycle tyres to the Indonesian domestic market, while it sells around 60% of its truck and bus tyres to buyers in South East Asia’s largest economy.
“For passenger cars, maybe about 85 % [of tyres] are exported,” said Chan. “If infrastructure were to improve, this would be a boom, not only to the automotive industry but related industries like ourselves.”
“In relative terms, Indonesia is probably the biggest percentage growth area, even in the next five years.”
Reuters cites the International Rubber Study Group as noting worldwide demand for rubber, both natural and synthetic, is due to rise to 26.1m tonnes this year from 24.4m tonnes last year 2010.
However, Chan said Chinese rubber demand was not growing as expected according to the news agency, as the government looks to dampen the economy.
“Lately we hear that demand is slowing down a bit,” Chan added. “It’s a demand cool-off, and is not going as rapidly as was envisaged.”
Indonesia will produce an estimated 2.9m tonnes of rubber this year, compared to 2.7m tonnes last year, the Indonesian Rubber Association said in April.
“Suppliers are saying the market balance will remain tight,” Chan said according to Reuters. “They don’t think it will go down much. Whether it improves depends on the weather.”
