Indonesian and Malaysian rubber prices set to rise
Indonesian and Malaysian rubber prices set to rise
SINGAPORE (Reuter): Indonesian and Malaysian traders said
yesterday rubber prices could rebound this week on hopes that the
end of a strike at U.S. auto giant General Motors would spark
fresh tire manufacturer buying.
But other southeast Asian traders were less optimistic, saying
some prices could continue to retreat in anticipation of selling
by growers eager to release stocks and raise cash.
The current wintering -- when trees shed leaves and output
dips -- is described by the trade as mild. So many farmers, who
had been holding back sales, could be forced to unload their
rubber to avoid running into cash problems, they said.
Traders in Indonesia, the world's second largest producer
after Thailand and a major supplier of rubber to the United
States, said the GM news signaled that the market was poised for
a recovery.
"Deals are likely to be done in the coming days on an expected
increase in demand as prices are considered to have hit a
bottom," one dealer in Indonesia's Medan said.
A Jakarta dealer said news that General Motors and United Auto
Workers union had reached a tentative agreement last Thursday to
end a 17-day strike boosted sentiment.
About 3,000 members of a trade union walked off the job at two
GM parts plants in Dayton, Ohio on March 5 to protest GM plans to
outsource brake parts.
The strike had caused a parts shortage that had almost
completely shut down GM's North American production.
Malaysian dealers said expectations of buying by China, Taiwan
and South Korea could provide a fresh stimulus to the market.
"There have been some enquiries from Asia, particularly from
China. If these continue this week, then we may see prices
reversing the recent downtrend," a dealer said.
But the upside potential could be capped by talk of a less
severe wintering this year, he said.
The Thai market, awash with rubber, is awaiting for major
buyer China to make a comeback.
"Dealers still have a lot of raw materials in hand and now
they're starting to liquidate their stocks," a trader said.
Benchmark RSS3 for May/June shipment was at around US$1.50 a
kg on Friday compared with $1.50-$1.51 a week ago.
Traders said there was no sign of Chinese buyers returning.
"The Chinese are still quiet. The major players are Japanese
dealers and end-users," one said.
The GM strike had a minimal effect in Thailand, traders said.
One trader said there were fewer enquiries from U.S. buyers,
but another trader noted that Thailand was not traditionally a
main supplier to the United States.