Mixed prices expected on SE Asian rubber market

Mixed prices expected on SE Asian rubber market

SINGAPORE (Reuter): Southeast Asian rubber prices are expected to be mixed this week in a quiet market devoid of major buyers, regional traders said yesterday.

With Western buyers away for their summer vacations, dealers said the only thing the market could depend on would be inquiries from Asian consumers.

"The Chinese are not sure of where to commit themselves. Prices in Indonesia are lower than Malaysia, but Thailand values are above us," one Kuala Lumpur-based trader said.

"The market may drift again this week. With weak consumer demand, the trade will probably verge on the lifeless," a Singapore-based rubber trader said.

Soft demand for latex would see easier SMR prices while other rubber grades should remain steady in Malaysia, traders said.

"There is still a lot of latex, but buyers are just not coming in as they know that latex prices can come down further," a dealer said. Malaysian drum latex for prompt shipment is currently quoted at around Malaysian 260 to 262 cents a kg.

"Top SMR grades like SMR CV and SMR L are likely to fall further," he said.

Dealers are offering SMR CV at 405 cents a kg, SMR L at 380, SMR 10 at 305 cents and drum latex at 260-262 cents.

"There is a surplus of raw materials in the market as the weather is improving," a dealer said, adding suppliers were quoting low levels to attract buyers because of large stocks.

The Malaysian benchmark August RSS1 buyer was quoted at 333.50 cents a kg against 330.50 cents a week ago, and August SMR 20 buyer at 304.50 cents against 302.50.

In Thailand, rubber prices firmed slightly as sporadic rain in southern Thailand's main rubber growing provinces threatened to interrupt supplies, traders said.

"The market is rather quiet, there's a firmer undertone," said one trader in southern Thailand.

Thai benchmark RSS-3 for September shipment eased to around US$1.28/kg FOB Bangkok from US$1.25/kg the week before.

"It's a correction coupled with uncertainty due to the weather and supplies. Rain could affect supplies," the trader said. Chinese buyers were said to be interested in making some purchases but there was no news of deals being struck.

"I've only heard that the Chinese want to buy but I haven't heard any news of any deals," another trader said.

Bulk latex was at 90 U.S. cents/lb, the same as last week, one trader said.

Indonesia

Indonesian SIR20 prices are also seen remaining mixed, but the market's tone is expected to turn more bullish as most sellers, particularly in Medan, are likely to stay firm to their offer prices despite continued pressures from buyers.

"Some sellers in Medan are still refusing to lower their offer prices below 55.00 U.S. cents (lb) despite strong pressure by buyers over the past two weeks," one dealer in Medan said.

"Selling SIR20 below 55.00 U.S. cents/lb is just unprofitable for sellers in Medan as prices of raw materials are higher here than in most other cities," another Medan-based dealer said.

Dealers said supply in Medan may be relatively tight, but it was likely to stay adequate in Palembang and some other key producing areas.

SIR20 offer prices were seen at between 55.00-55.50 U.S. cents/lb fob Medan for August/September deliveries, at 54.75- 55.25 cents/lb fob Palembang, Padang and Surabaya and between 54.50-55.50 fob Jambi and Pontianak, they said.

One SIR3L dealer in Medan said he expected to increase sales of shoe-grade SIR3L due to expected rising demand.

"Some sellers are shifting to SIR3L from SIR3CV due to expected rising demand in SIR3L. The shifting is relatively easy as the raw material for both is latex," he said, adding that SIR3L was on offer at 112.0 cents/kg fob Medan for prompt deliveries.

Latex dealers said high ammoniac grade latex, with 60 percent dry rubber content was last traded at Rp 2,425 in Bandung.