Holidays to keep SE Asian rubber prices weak
Holidays to keep SE Asian rubber prices weak
SINGAPORE (Reuter): Southeast Asian rubber prices are seen
drifting lower this week on the back of the summer holiday season
in Europe and the U.S. although some Chinese inquiries may limit
the falls, dealers said yesterday.
"The market looks no good. There's no demand at all due to the
summer holiday season," a senior dealer for a commodity house in
Singapore said.
"The overall market sentiment is still bearish and we haven't
heard of any fresh deals today. We are hoping that INRO
(International Natural Rubber Organization) will intervene to
prop up prices, but we are not sure," a trader in Indonesia
added.
Traders in Thailand, the world's biggest natural rubber
producer, expect China to start replenishing stocks in its
factories although no firm orders have been placed yet.
"But they are expected to buy soon, within this month," said
one trader in Thailand. "It's dead quiet last week after the baht
float. But we expect China's presence to help lift the gloom
soon, at least for the near-term."
Other dealers, however, were less optimistic about China
coming into the market to buy, especially with rubber prices seen
heading lower.
"I don't see Chinese offtake coming in," a Singapore-based
dealer said.
Regional dealers were also taking a close look as prices
approach the INRO's may-buy level of 183 Malaysian/Singapore
cents a kg.
"It's drawing closer to INRO's intervention level although
we're just watching it for now," one dealer said.
Thai traders likewise downplayed the impact of a rubber
producers' rally last week in the south of the country, saying it
barely affected the market.
About 1,000 rubber producers and rambutan growers staged a
rally in the southern province of Surat Thani to demand more
government help.
Some rubber planters claimed that the government had so far
not bought rubber from the province at guaranteed prices.
The government launched a price intervention scheme in May,
under which it bought grade three unsmoked sheet rubber from the
domestic market at 29.00 baht a kg.
"The magnitude of the rally was small. They threatened to
block the railway line and every thing. But that has no immediate
impact on the market," a dealer said.
The Thai benchmark RSS3 for August delivery was quoted on
Friday at 87.00 U.S. cents a kg FOB Bangkok. October was quoted
at 97.50 cents and January 91.50 cents on the same basis.
In Indonesia, traders said they expected tire-grade SIR20
offer prices to slide further because of bearish sentiment in the
market and the de facto devaluation of the Thai baht.
"I haven't sold anything yet since the last deal on Wednesday
at 43.00 (U.S. cents/lb) FOB Padang for September shipment. I am
afraid prices will decline again next week as our attention is
still on Thailand," a dealer said.
SIR20 finished the week at 44.00 cents FOB Medan, 43.375 cents
FOB Palembang, 43.50 cents FOB Surabaya and 43.25 cents FOB
Pontianak and Jambi.
Malaysian dealers, on the other hand, expect prices to fall by
an average of five cents this week as the market remains under
pressure from weak demand.
The Malaysian Rubber Exchange and Licensing Board quoted July
RSS1 buyer at the close of trade on Friday at 243 Malaysian cents
a kg, down 20.5 cents from the previous Friday. July SMR 20 buyer
was seen at 237.50 cents.
"I think we'll see a correction of around five cents for both
grades this week, (but) that's a conservative estimate," a trader
in Malaysia said.
Demand from foreign consumers remained weak, with European
buyers away for the summer holidays while others had restricted
their buying mainly for shortcovering, dealers said.
Malaysian trading houses said SMR 20 was being offered at 236
cents a kg, SMR 10 at 238 cents, SMR CV at 307 cents, SMR L at
287 cents and drum latex at 204 cents.