Malaysian rubber prices weak, INRO entry awaited

Malaysian rubber prices weak, INRO entry awaited

KUALA LUMPUR (Reuter): Malaysian rubber prices were poised to
end another week sharply lower as the International Natural
Rubber Organization (INRO) studied the possibility of supporting
the market through an intervention.

"INRO hasn't been in the market for four years now and I don't
know whether their involvement is going to change anything much,"
a trader told Reuters on Friday.

The INRO's five-day indicator dipped on July 10 to 182.48
cents a kg, a level where the group may buy rubber from the
market.

But an official for the international rubber body hinted that
it would not intervene in the market unless the indicator price
fell to 172 cents, the level where INRO was obliged to buy rubber
from the market.

"As it is now, it's only at the may-buy level," the INRO
official said.

Traders were generally of the opinion that INRO would wait for
lower levels. "INRO will only intervene if (the indicator)
reaches around 177-180 cents," said one.

Malaysia's benchmark RSS1 buyer for August was quoted at 227
Malaysian/Singapore cents (91 U.S. cents) a kg at midday Friday,
down 16 cents from the closing price a week ago.

The popular SMR20 grade came off 4.50 cents to 232 cents a kg.
"The SMR20 always holds a little firmer than the RSS1 because its
more popular with consumers," said a trader, adding that there
was some shortcovering of the grade despite the bearish last two
weeks. On Friday, a total of 2,000 tons of the SMR20 was reported
traded to Germany and China.

The trading price of the SMR20 at midday Friday was 232 cents.
Traders quoted other grades such as the SMR5 at 244 cents, the
SMR10 at 235, the SMR L at 280, the SMR CV at 299 and drum latex
FOB at 198.

Traders said the official price of the RSS1 could fall by
another 10 cents in the week ahead. They also estimated the SMR20
to be officially cheaper by another five cents.

"There is still no indication of buyers returning to the
market in a big way," said one trader. "The Europeans are having
their summer holidays while all others are generally sidelined,
so I guess we'll still see some consolidation in prices."

Malaysian rubber prices have been in the doldrums for nearly
18 months now, mainly due to weak foreign interest and
competition from Thailand and Indonesian rubber.

The flotation of the Thai baht last week worsened the impact
when it dragged down prices of Thai rubber as well as others in
the region.