Rubber prices may plunge this month

Rubber prices may plunge this month

SINGAPORE (Reuter): Rubber prices, now buoyed by seasonal factors, could move lower in coming weeks as the market lacks strong fundamental support, delegates at an industry meeting said yesterday.

They said at the ASEAN Rubber Business Club meeting that firm prices, supported by unusually heavy rains and the current wintering period when latex flow is minimal, were favorable for both growers and traders.

"But we should be cautious as the current price increases are not structural," A.F.S. Budiman, executive director of the Rubber Association of Indonesia (Gapkindo) told Reuters in an interview.

He said that the meeting also discussed the plight of Thai traders who have lost rubber shipments bound for China.

At least three cargoes have gone missing on the high seas in recent months, with the latest case involving a consignment of 3,400 tons of rubber, Budiman said.

"The latest case is in the hands of Interpol," he said without elaborating. China is a major buyer of Thai rubber.

Indonesia, Malaysia and Thailand are the world's largest producers of natural rubber and are all members of ASEAN, the Association of South East Asian Nations. ASEAN also groups Brunei, the Philippines, Singapore and Vietnam.

Budiman said the current wintering period -- when trees shed leaves and production declines -- followed heavy rains and floods in some of Indonesia's key growing areas.

"There's been a shortage of rubber since early this week, compared with last year, because of the heavy rainfall and this has pushed prices higher," he said.

Indonesian benchmark SIR20 rubber is fetching 69 U.S. cents a pound, up from around 55 cents six months ago but down from around 80 cents a year ago.

Wintering, which started in February, could last until April.

Budiman said despite high prices, global demand, with the exception of China, was quite constant. The Chinese are likely to stay out of the current market until prices move much lower, he concluded.