Rubber prices may slide further on weak demand

Rubber prices may slide further on weak demand

SINGAPORE (Reuter): Southeast Asian rubber prices, which have been battered for weeks by soft demand, may slide further because of continuing weak consumer interest, regional traders said yesterday.

"It's probably going to be flat again," a Singapore-based dealer working for a Western commodity house said. "If no firm offtake emerges, you'll see prices drifting down again."

"Prices are likely to slide further this week. The Europeans are back from the summer holidays, but I don't know why they are not buying," a dealer at a Malaysian trading firm said.

"Probably they are waiting for lower prices or have sufficient carry-over stocks to continue with their operations."

Dealers were offering SMR CV at 369-369 Malaysian cents, SMR L at 348-349 cents, SMR 5 at 318-320 cents and SMR 10 at 308 cents a kg. Drum latex was seen around 237-240 cents a kg.

The Malaysian benchmark Oct RSS1 closed on Friday at 313.50 cents a kg against 324.50 cents a week earlier, and Oct SMR 20 was at 307 cents against 313 cents.

Indonesian rubber prices are likely to also stay soft this week on the back of continued weak demand and adequate supplies, dealers said.

"Indonesian rubber, including the benchmark SIR20, is likely to stay soft," one Jakarta-based dealer said.

SIR20 offer prices for October/November shipments are likely to remain weak at 55.50-56.00 U.S. cents/lb FOB Medan and at 55.25-55.75 cents FOB Palembang, Surabaya and Padang, and at 55.00-55.50 cents FOB Jambi and Pontianak, traders said.

Dealers said RSS1, SIR3CV, SIR3L, SIR10 and SIR5 are also likely to stay soft in the coming days due to lackluster demand.

RSS1 last traded at 133 U.S. cents/kg on Thursday, down from the previous 135 cents/kg following Japanese buying for early November deliveries, one Medan-based dealer said.

SIR3L is also expected to stay soft following U.S. buying of SIR3L at 137.65 cents/kg C&F New York on Thursday compared with 139 cents previously, a dealer in the Indonesian capital of Jakarta explained.

Offer prices for high ammoniac grade latex with 60 percent dry rubber content were seen edging higher by 10 to 25 rupiah to 2,240 to 2,260 rupiah in the markets of Bandung and Tangerang this week on expectations of good demand.

In Thailand, rubber prices eased slightly last week in a market packed with sellers and few buyers, trade sources said.

Thai benchmark RSS3 for October shipment was quoted around US$1.25 a kg last week, compared with $1.26-1.29 the previous week. Latex also dipped and was quoted at around $0.99/kg from $1.02 the week before.

High stocks in Japan and rising supply continues to pressure the market, industry sources said.

"Asians, particularly the Chinese, are not buying from us but they are taking Thailand RSS3 sheet rubber which is slightly cheaper or at par with SMR 20," a Malaysian dealer said.

"Technically, the market has not seen the bottom yet and with the lack of demand, we think prices will come down again," a trader in the Malaysian capital of Kuala Lumpur said.