Asian rubber price outlook stays bearish
Asian rubber price outlook stays bearish
SINGAPORE (Reuters): The outlook for the Southeast Asian rubber market continues bearish this week, with the market likely to be pulled down by further falls in Tokyo rubber futures, dealers said yesterday.
Asked where the regional rubber market will head this week, a trader in Singapore said: "Down, down."
"It seems nothing can stop the market's slide with Tokyo (rubber) heading down...and Thailand deciding to sit on its 122,000-ton rubber stockpile," the trader said.
Japan's benchmark May rubber futures sank to a new 3-1/2 year low of 98.3 yen per kilo last week.
Traders in the region said the Southeast Asian rubber market will take its cue from the Japanese market due to lack of fresh incentives to boost sentiment.
"Bearish Tokyo will put pressure on our rubber prices as well," said a trader in Thailand.
"We expect the market to be quiet because of lack of fresh factors," a trader in Indonesia said.
"There is an expectation the market in Tokyo will be affected by the movement of the yen against the dollar and this will have some impact on the local market in terms of sentiment," the Indonesian trader added.
In Malaysia, traders expected buyers to remain on the sidelines despite tight supplies.
"Producers are not selling aggressively as there is not much to sell amid tight supply due to weather problems, while most buyers have already covered their positions for the year," said a trader in a Malaysian plantation firm.
"December is going to a quiet month."
Malaysian rubber prices are expected to drift at current levels because of the reluctance of producers to sell aggressively amid a supply shortage due to monsoon rains, dealers said.
"Everyone seems to be tight. Yes, we can buy raw material from Thailand but it will be more expensive due to (the) currency exchange," the Malaysian trader said.
The monsoon rains have started in Malaysia and would continue till January, dealers said.
"This has already started hitting output in some (rubber) growing areas in Malaysia," said one trader.
On Friday, the buying price of Malaysia's benchmark December International Ones RSS was up 1.50 Malaysian cents to 277 per kilo compared to a week before.
Other countries in the region also expected low trade volumes this week.
"I don't expect the trade this week to be exciting," a trader in Thailand said.
On Friday, Thailand's January RSS3 rubber was quoted at 71.75 U.S. cents a kilo FOB Bangkok, traders said.
Indonesia's tire-grade SIR20 was expected to soften this week due to poor demand.
On Friday, offer prices for February shipment were quoted at 37.625 FOB Medan, 37.50 FOB Palembang and Surabaya and 37.25 FOB Pontianak and Jambi, traders said.
"The overall market sentiment will be soft (this week). There is no sign of fresh leads which can boost the sentiment," said an Indonesian trader.
"Some people believe prices will drop to 35.00," said another.