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.