SE Asian rubber market weakened
SE Asian rubber market weakened
SINGAPORE (Reuters): The Southeast Asian rubber market will
likely be wobbly this week as most buyers take shelter from
renewed currency turmoil in the region, dealers said yesterday.
"The currencies are a problem for everyone," said a dealer in
a Singapore-based commodity house
The steep fall of the Korean won last week sent shock waves
across the region.
"I expect bearish demand from Korea and Japan due to the
volatile currency market. Buyers will probably dry up as they
wait for the foreign exchange markets to calm," a senior trader
in Singapore told Reuters.
Yesterday, Japanese buyers are expected to be out of the
market due to their Labor Thanksgiving holiday. The Japanese
markets reopen on Tuesday.
Malaysian traders said they expected prices to rise this week
on prospects of tight supplies owing to unfavorable weather
conditions and the weaker Malaysian ringgit against the U.S.
dollar.
"Production is seen hit by seasonal rains in the country. We
feel that supply will flow in slower than usual," a trader in a
large plantation firm said, adding a falling ringgit could also
lead to an upward adjustment in prices.
"We could offset the shortfall by buying raw materials from
Thailand but it would be more expensive as the ringgit is so
weak. We have to pay more," he added.
Some dealers said there was talk that supply in Thailand is
likely to improve and has more to offer to consumers.
"But some consumers would only want to buy quality grades or
products, so I think the buyers may come here (Malaysia) to
enquire," the dealer said. Thailand is the world's biggest
supplier of natural rubber.
Regional traders said most rubber buyers in the region could
afford to sit and wait for the financial turbulence to pass since
most firms had bought supplies for the rest of the year.
Rubber supplies elsewhere in the region, except Malaysia, are
also high, they said.
"Buying, if there's any, will depend on the foreign exchange
markets this week," said one Singapore trader. "Most latex
consumers have covered their positions and looking for forward
months with drum latex pricing offered at 220 cents," a Malaysian
dealer said.
"But if consumers need to buy for prompt delivery, they have
to pay at high levels. There is no choice," another dealer in a
trading house in Malaysia added.
On Friday, Malaysia's benchmark December RSS1 buyer was up
1.50 Malaysian cents at 278.50 cents a kg.
Indonesian traders said they expected prices for the benchmark
SIR20 to soften this week due to poor demand.
"Demand is very poor. Some traders even think prices may fall
to 35.00 U.S. cents/lb. Prices in Malaysia and Thailand are
cheaper," said one trader.
Offer prices for January shipment were quoted at 38.75 cents
FOB Medan, 38.25 cents FOB Padang and Palembang, 38.375 FOB
Surabaya and 38.00 FOB Pontianak and Jambi.
In Thailand, the market was generally quiet last week except
for a small-lot buying by tire manufacturer Michelin and routine
buying by some Japanese houses.
The trade will also be keeping an eye on a Thai cabinet
meeting on Tuesday which may decide on the fate of its 122,000
ton buffer stock and the fate of its rubber intervention scheme.
"On the local rubber stockpile, I don't think the agriculture
ministry wants to sell but it will depend on the new government,"
a dealer in Thailand said.
The Thai benchmark RSS3 was quoted at 77.00 U.S. cents per kg
FOB Bangkok for March shipment. January/February shipment was
quoted at 75.00 cents on the same basis.