PADANG, Indonesia (Oct. 1, 2009)—A catastrophic earthquake in Sumatra, the largest island and main rubber-growing part of Indonesia, has created fears in the rubber industry that natural rubber supplies could grow short, particularly in Standard Indonesian Rubber 20, the grade most commonly used by U.S. tire makers.
A 7.6-magnitude earthquake Sept. 30, followed by a powerful aftershock the next day, destroyed the town of Padang, a major NR port, and several surrounding towns and villages. The death toll stood at 531 as of Oct. 1 and was expected to go higher, as many people remained buried under the rubble in Padang.
Some 50,000 metric tons of NR scheduled for October and November shipment will be delayed at least one or two weeks because of impassable roads between plantations and ports, according to news reports.
The situation in Sumatra probably will remain unclear until next week, but any supply disruption would come at the worst possible time, according to a source who asked to remain anonymous.
“The 'Cash-for-Clunkers' program caught many tire makers by surprise,” the source said. “For the past six to eight weeks, there's been a lot of demand for nearby shipments of SIR 20, so the market is tight already.”
The supply problem most likely will be localized in the U.S., the source said. Padang is the leading “break-bulk” port, meaning it ships rubber in crates rather than containers. U.S. tire makers accept break-bulk shipments, but European tire makers do not.
SIR 20 fetched a price of $1.05 per pound ex-dock (at the port of origin) Oct. 1, up from $1.02 Sept. 25.