Rubber mart watches Sino-Thai deal

Rubber mart watches Sino-Thai deal

SINGAPORE (Reuter): The Southeast Asian rubber market will
look closely at talks between Thailand and China this week to
wrap up details on a rubber deal, but expectations remain muted
because of poor demand, traders said on yesterday.

Thai officials are going to Beijing to work out the details of
an agreement signed last April under which China will buy 382,000
tonnes of rubber for 1997.

"China is not going to pay the price the Thais will be looking
for to support the market," a senior rubber trader with a
commodity company in Singapore said.

Thailand's National Rubber Policy Committee last week said it
was raising its intervention price for RSS3 grade rubber to 29
baht a kg from 27.50 baht to help prop up a rubber market hit
hard by weak demand.

"I don't think they'll get the price they're looking for,"
another trader in Singapore said, adding the price for RSS3 in
the market is seen at around 24-25 baht.

"But the trip may give some hope for the market and may
trigger some covering from this end," the dealer added.

Thai rubber prices were steady to higher last week as it was
lifted by modest buying from Japan and a spate of inquiries from
China, traders said.

The Thai benchmark RSS3 was seen around 108.50-109.00 U.S.
cents a kg FOB Bangkok last week against 108.50 cents the
previous week.

The rest of the market was quiet, although Indonesian dealers
expect some improvement in SIR20 offer prices especially after
the union in Goodyear Tire and Rubber Co Inc [GT.N] ratified an
agreement last week ending a three-week long strike.

"Buyers want to buy rubber at least at 45.25 (U.S. cents/lb),
but traders think it is not profitable for them. The only thing
which makes us feel better is the end of the strike in Goodyear,"
said one trader in Indonesia.

"We expect an improvement in rubber prices this week because
of Goodyear," said another trader.

Offer prices were quoted at 46.75 cents FOB Medan for May/June
shipment, 46.25 cents FOB Padang, 46.50 cents FOB Surabaya, 46.00
cents FOB Jambi and 45.75 cents FOB Pontianak.

In Malaysia, prices fell again last week because of soft
consumer demand. Dealers said they did not expect a rebound in
the market until the end of May at the earliest.

"I think there might be some buying from June as importers
usually balance positions for the mid-year," said a dealer.

"Also, the market looks like it's bottoming out."