Rubber prices bearish in Asia

Rubber prices bearish in Asia

SINGAPORE (Reuters): Southeast Asia's rubber market is poised to trade within a tight band this week amid bearish tendencies as prospects of an International Natural Rubber Organization (INRO) intervention wane, traders said yesterday.

Hopes of an INRO intervention faded as the INRO five-day moving average price climbed further away from the may-buy level of 132 Malaysian/Singapore cents a kg.

The five-day average was at 188.47 cents on July 2 against 186.78 on July 1.

INRO, which groups major producers and consumers, calculates rubber prices in an artificial currency with a value between the Malaysian cent and the Singapore cent.

It sets levels at which it will buy or sell to stabilize the market.

Traders said they expected the Malaysian market to turn quiet again after posting good gains last week on the back of short covering by local dealers and a weak ringgit against the dollar.

Traders said demand from overseas consumers remain poor, partly because of cheaper rubber being offered in Indonesia.

At the close of last week, the Malaysian Rubber Board quoted August RSS1 buyer at 284 Malaysian cents (69 U.S. cents) a kg, up 9.50 cents for the week.

August SMR 20 buyer was 6.50 cents higher at 256 cents a kg.

In Indonesian, buyers took to the sidelines on expectations of further price falls.

"Buyers are still waiting for lower rubber prices and the market will be quiet again," one Jakarta-based trader said.

Traders said interest for forward shipments such as December remain high because buyers expect prices to fall further.

Tire-grade SIR20 for September/October was quoted at 27.75 U.S. cents/lb fob Medan and at 27.50 fob Palembang and Surabaya.

Thai rubber prices were also expected to move in a narrow range with downward bias this week in an absence of fresh leads, traders said.

Demand remain sluggish as buyers turned their attention to Indonesia which offered at lower prices, they said.

A report that Thailand was negotiating a rubber-for-fertilizer deal with China created no ripple in the market.

Thai RSS3 rubber was quoted at 71 US cents on FOB basis for October shipment. November was quoted at 72 cents and December at 73 cents, they said.