Indonesian rubber prices seen above $4/kg in second-half

Indonesian rubber prices could stay above $4 a kg in the second half of this year on steady demand from tyre makers, but are unlikely to revisit a life-time high struck earlier this year, the Indonesian Rubber Association (Gapkindo) said on Monday.
"Demand is still strong, despite China's tight money policy," said Suharto Honggokusumo, executive director of Gapkindo, referring to the world's largest consumer. "I expect rubber prices to be steady. In the southern part of the equator, wintering has started," he added.
Indonesia's tyre grade SIR20 touched a record at $5.8 a kg in February on worries about supply triggered by heavy rains in Thailand, Indonesia and Malaysia as well as an increase in demand from top consumer China, dealers said. The United States imported around 546,000 tonnes of rubber in 2010, making it the main buyer of the commodity from Indonesia, the world's second-largest rubber producer after Thailand.
But Indonesia's exports to China were forecast to rise to 450,000 tonnes in 2011 from 418,098 tonnes in 2010, while shipments to other key consumers such as India and Brazil were also expected to increase. China car sales in June rose 6.2 percent from a year earlier, reversing a decline in May, helped partly by improved availability of Japanese cars as automakers such as Toyota Motor Corp gradually recovered lost output. "China's imports of Indonesian rubber grew by 16 percent in January to May. So imports in 2011 could exceed those of 2010," said Honggokusumo.
"The auto sector in China is still growing even though there's pressure from the government's tight money policy," he added. China's once-sizzling auto market has cooled significantly after Beijing stripped away most of its policy incentives for the industry at the end of 2010, but some analysts said the decline was temporary. General Motors Co , the largest overseas automaker in China, reported a 9.9 percent rise in June sales, ending two consecutive months of declines as solid demand for its more upscale Buick and Cadillac cars offset weak mini vehicle sales.