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.