Currencies keep SE Asian rubber prices on edge

Currencies keep SE Asian rubber prices on edge

SINGAPORE (Reuter): Southeast Asian rubber prices are seen trending steadily this week but uncertainty over the region's volatile currency markets will keep the trade cautious, dealers said yesterday.

Although gains in Japanese futures markets and regional buying inquiries point to firmer price levels, any gains are likely to be limited by slack demand during the summer holiday period in the U.S. and Europe as well as the currency factor.

"Uncertainty in regional currencies, although they have stabilized a bit, is still lingering in players' minds," a dealer in Malaysia said.

A trader in Thailand, the world's biggest natural rubber producer, said the market there is also waiting for word on an economic rescue plan being crafted with the International Monetary Fund (IMF) to restore calm to the wobbly baht.

"Many prefer to see what that (IMF package) will mean to the foreign exchange market before making a move," a trader said. But buying sentiment around the region has improved due to the stronger performance of the Japanese markets.

Dealers in Indonesia said the steady gains in Tokyo had resulted in buyers from the United States and Singapore trickling back into the market, but added they did not expect any significant rise in values.

"Buying interest has been improving, and I think prices will be steady this week if not slightly higher," one said.

"Tokyo futures posted gains last week, and this should help give some support to our market," he added. "Tokyo's gains have been the main reason for prices firming in Indonesia."

Thai traders said the gains in Japan and fresh inquiries should help shore up prices.

But any major pickup in demand will have to wait for the end of the summer holiday season in the U.S. and Europe.

"The market may be flat or fluctuate at around current levels," a dealer in Malaysia said. "They (Far East buyers) are checking prices on the latex and SMR grades of rubber for forward shipment."

"Most of the people will be off for summer and the offtake may weaken as a result," a Singapore-based dealer added.

"The trade improved a bit but the overall market is still quiet. There's some short-covering here and there," a dealer in the Thai rubber center of Hat Yai said.

Malaysian dealers said stocks remain ample although rains later in the year may cause inventories to tighten.

Indonesian dealers said September SIR20 offers were quoted 0.25-50 cents higher at 44.00 U.S. cents/lb FOB Medan, 43.75- 43.875 cents FOB Palembang and Surabaya, 43.50 cents FOB Padang and 43.25 cents FOB Pontianak and Jambi.

In Thailand, the benchmark RSS3 for September was quoted around 100.00-101.00 U.S. cents/kg FOB Bangkok. December was indicated around 100.00 U.S. cents a kg on the same basis.

The key August RSS1 rubber was quoted at 250.50 Malaysian cents a kg at the close of the market on Friday. August SMR 20 finished the week at 250 cents.

Dealers offered SMR CV at 294 cents, SMR L at 275, SMR 5 at 254 cents, SMR 10 at 248, SMR 20 at 246 and latex at 190 cents.