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."