RI turmoil may keep rubber prices secure
RI turmoil may keep rubber prices secure
SINGAPORE (Reuters): Continuing worries over instability in
Indonesia, one of the world's biggest rubber producers, are
likely to support prices this week, regional traders said
yesterday.
However, they expected the market to stay quiet with little
activity due to lack of demand across the region.
Former Indonesian President Soeharto announced his resignation
last Thursday after 32 years in power, and former Vice President
B.J. Habibie was sworn in as his successor.
"Indonesia could be stabilising after Soeharto quit, but most
people are still adopting a wait-and-see attitude," said one
Singapore-based trader.
Rubber futures prices rose last week, backed by expectations
rubber supplies from Indonesia could fall as a result of social
unrest there.
"I think prices will be supported this week but I don't see
big gains because there is still no demand," the trader said.
Prices in Indonesia went up at the end of last week as fewer
traders were available during the nation's social unrest, but
traders expected market sentiment to stay bearish this week.
"We don't know what's going to happen next, but surely the
political situation will remain the main issue," said one trader
in Jakarta.
"The rubber market is still strictly ruled by supply and
demand...the political situation has caused buyers to shun the
market and turn to countries such as Malaysia and Thailand," said
one trader in Padang, west Sumatra.
Tire-grade SIR20 ended last week at 33.50 U.S. cents/lb for
June shipment fob Medan. June shipment was quoted at 33.50 fob
Padang in west Sumatra.
Traders in Malaysia said prices would depend on the political
developments in Indonesia this week.
"For now, the situation in Indonesia is calm but we never know
what will happen next," said a trader in Kuala Lumpur.
However, the tight supply situation for Malaysian rubber
should keep prices stable, dealers said.
On Friday, the Malaysian Rubber Board quoted the benchmark
RSS1 at 303/305 cents a kg and SMR 20 at 296/298 cents a kg.
In Thailand, rubber prices were firmer last week and concerns
over nagging political uncertainties in Indonesia would remain
the main market factor this week, Thai traders said.
The upside could be limited by market talk the Thai government
had quietly unwound 30,000 tonnes of rubber from its stock into
the market.
"Some buyers rushed to cover short positions. Although the
tension seems to have eased somewhat, lingering uncertainties
still caused concerns about exports as most people in this
business there are ethnic Chinese," said a Hat Yai trader.
Thai RSS3 for July shipment rose to 79 US cents a kg on FOB
basis compared with 78 US cents on Thursday. August was quoted at
80 cents and September 81 cents.
"But market talk that the government had dumped 30,000 tonnes
of rubber from stocks into the market caused buyers to bargain
hard for lower prices," said another trader.
"We cannot get confirmation because there is no public auction
as promised by the government. It could have been a hush deal,"
he said.
A senior government official at the Rubber Estate Organization
declined to comment on the talk.