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.