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.