Holidays, weak demand to hit SE Asia rubber prices

Holidays, weak demand to hit SE Asia rubber prices

SINGAPORE (Reuter): A string of holidays in Southeast Asia along with soft demand will keep rubber prices in the doldrums this week, regional traders said yesterday.

"It's going to be a terrible week. I don't think demand will be good because many of the producers will be on vacation with all the holidays we're having this week," a dealer for a North American trading house based in Singapore told Reuters.

Thailand will be closed on Monday and Tuesday for the Songkran festival while Malaysia, Indonesia and Singapore will shut down on Friday for the Idul Adha Moslem holiday.

"I believe the bearish trend will continue this week. There don't seem to be any fresh factors that could boost poor market sentiment," said one trader in Indonesia.

Dealers said June offer prices were quoted at 49.25 U.S. cents a lb FOB Palembang and at 49.50 cents FOB Medan and Surabaya. Offer prices were quoted at 49.00 cents FOB Padang and at 48.75 cents FOB Pontianak and Jambi.

Indonesian prices could fall further because of abundant raw materials while some said offer prices may plunge to as low as 45.00 cents a lb if the bearish trend continues.

"I think the market will suffer a lot from this kind of a situation. Raw material is abundant while buyers are so few," a trader said.

While the recent wintering period tightened supply in the North Sumatran city of Medan, stocks have still started to pile up because of the scarcity of buyers.

A Malaysian trader said he expected prices this week to dip. "Everybody is waiting for the market to drop further hoping that buyers will return," he said.

A build-up in stocks may put pressure on producers to further trim their offer prices, Malaysian-based traders said.

The Malaysian Rubber Exchange and Licensing Board quoted the benchmark RSS1 at 290.50 Malaysian cents a kg for May buyer at the close of the market on Friday. May SMR 20 buyer was quoted at 275 cents.

Drum latex was quoted by trading houses on Friday generally steady at between 233.00-235.00 cents a kg on Friday.

In Thailand, subdued demand and the lack of fresh leads continued to depress rubber prices despite tight supplies of RSS3 grade rubber, dealers said.

"The supplies of RSS3 were tight. The recent rain has affected the quality of rubber. Most producers can produce only the RSS4 and RSS5," said one trader in Hat-Yai.

"Some shippers even had to delay their March/April shipments of RSS3 to Japan," the dealer added.

Overall demand in Thailand, the world's biggest natural rubber producer, remained weak, dealers said.

China bought modest amounts of rubber last week, but their preferred price of around 115.00 U.S. cents a kg was seen by many in the trade as too low.

"I heard China bought around 1,000 tons of SIR rubber from Indonesia. But there was not much going on here," said one Bangkok-based trader.

The Thai benchmark RSS3 rubber was indicated around 116.00 U.S. cents a kg FOB Bangkok on Friday.