Poor sentiment to dominate rubber market

Poor sentiment to dominate rubber market

SINGAPORE (Reuters): Asia's rubber trade is expected to stay
static this week with demand poor and some suppliers holding back
stocks, regional traders said yesterday.

"If you buy raw material from Indonesia or Thailand, it's very
cheap," said a Singapore-based rubber trader.

"But suppliers there are not selling cheap. They know the
margin is high to buy cheap raw material. They are not very eager
to sell," the trader added.

One of the main consumers emerged to bid for June supplies at
low prices last week but could not find suppliers, another trader
in Singapore said.

China was heard to place some inquiries, but buyers on the
mainland were not keen to strike a deal, the trader said.

Market focus would be on the political and economic situation
in Indonesia after its key election this week, traders said.

Security has been tightened across the archipelago as the
country's highest body, the People's Consultative Assembly (MPR),
gathers in Jakarta to elect a president.

President Soeharto is expected to be re-elected for a seventh
five-year term.

"For sure prices will fall further this week. We don't know
exactly why buyers are hiding, but there are talks it may be
caused by political concern," said one trader in Padang, West
Sumatra, Indonesia.

"Buyers may be afraid to buy rubber because of fear traders
cannot fulfill their commitments if something bad happens here,"
the trader said.

May tire-grade SIR20 finished last week in Medan, Surabaya and
Palembang at 34.75 U.S. cents/lb, at 34.00 in Padang and at 33.75
in Pontianak and Jambi.

"The rupiah movement makes players stay at the sideline. The
sentiment is very bearish and buying interest is very poor," said
one trader in Jakarta.

In Thailand, the market remained weak last week on sluggish
demand, partly on news the government planned to sell 89,000
tons in its stockpile to local exporters, traders said.

"It is quite hard to predict when prices will stabilize as we
are still seeing weak prices in Tokyo," said a trader from a
major house in Bangkok.

"The market is in a downtrend so there is not much trading and
people are cautious," the trader said.

Thai RSS3 for nearby shipment was quoted around 70-71 U.S.
cents a kg FOB Bangkok on Friday.

In Malaysia, a lack of demand and news of the Thai
government's plan to sell rubber stockpile dragged prices lower,
traders said.

"There are no buyers in the market. They preferred to wait for
attractive levels," said a dealer at a trading firm in Thailand.

"On top of that, sentiment was further dented by the Thai
news," the trader said.

In the absence of overseas demand, activity was confined to
hand-to-mouth basis, dealers in Malaysia said, adding that the
market only saw buyers negotiating on price levels.

At the end of last week, the Malaysian Rubber Board quoted the
RSS1 buyer for April at 282.50 Malaysian cents (70 U.S. cents) a
kg and the April SMR20 buyer was priced at 295.50 cents a kg.