The development of rubber based industries such as tire industry, engineering equipment industry, carpet industry and others in Indonesia has made the demand for its main raw materials i.e. natural rubber and synthetic rubber to rise. Indonesia is the second largest producer and exporter in the world so it is able to meet the rubber-based industries’ demand for natural rubber.
However, until 2019 Indonesia is not able to meet the demand for synthetic rubber, which is a complementary product of natural rubber, as a result of limited capacity of this commodity industry. This condition has caused the import volume of synthetic rubber to escalate and it makes Indonesia strongly depend on synthetic rubber.
On the other hand, the price of synthetic rubber is also influenced by oil price which is as its main raw material. Also, the synthetic rubber price is also able to affect natural rubber price. For instance, when the oil price is inexpensive, the production cost of synthetic rubber can be considered to be more economical than that of natural rubber.