Regional rubber prices seen weak

Regional rubber prices seen weak

SINGAPORE (Reuters): The Southeast Asian rubber market will not get a lift from the New Year this week, with prices seen languishing because of weak demand, traders said yesterday.

"It looks like prices will drop down some more," said a senior rubber dealer for a Western commodity house in Singapore. "The Chinese are out while the others are just engaged in normal buying."

Trading in Thailand, the world's biggest producer of natural rubber, was subdued with many players jittery on Monday as the Thai baht hit fresh lows of 50 to the U.S. dollar.

A trader in Malaysia said that buying by consumers was low and prices would probably trade in a narrow range this week.

"The official price quote is being kept tight but in reality, there's very little interest in the market," a trader said.

"I think prices will stay the same this week and the market will be looking for fresh leads. Prices have been very low in the past few months," a dealer in Indonesia added.

Dealers in Malaysia were skeptical if the end of the Christmas holidays and the fall of the Malaysian ringgit to a new low of four to the dollar would lead to any surge in buying.

But traders in Thailand expect activity in the market to pick up later this week as players need to cover their positions after the long holidays.

"Buyers, especially from Japan, will enter the market for April and May rubber, but the bids will be low in line with the softer baht," said one trader in the Thai rubber center of Hat Yai.

A dealer in Singapore, however, said the market would remain quiet this week, weighed down by bearish fundamentals in the market.

"The overseas buyers are sitting on the sidelines. We have a lot of nearby rubber. I don't expect any kind of heavy activity this week," she said.

The Thai benchmark RSS3 for April/May shipment was offered at around 65-67 U.S. cents a kg FOB Bangkok while nearby rubber was quoted at around 60 cents a kg.

Traders in Indonesia said offer prices for the benchmark SIR20 were quoted at 33.375 cents/lb FOB Palembang for March shipment and at 33.625 cents for April.

Buyers placed their bids at 32.25 cents for March shipment, which was considered by sellers as too low, dealers said. In Malaysia, the benchmark RSS1 for January buyer was priced at 273.50 cents Malaysian cents a kg. SMR20 for January buyer was quoted at 274 cents.