SE Asian rubber prices climb up on better demand

SE Asian rubber prices climb up on better demand

SINGAPORE (Reuter): Southeast Asian rubber prices, bedeviled for weeks by poor consumption, are seen edging up on the back of fresh demand expected to come in ahead of the summer holiday season, regional dealers said yesterday.

"I think prices will keep their upward momentum this week," one trader in Indonesia said. "Demand is expected to be better, but I don't expect any significant improvement."

"The summer holiday season is approaching soon and many Europeans are seen building up their stocks," a dealer at a trading firm in Malaysia added.

Traders in Thailand, the world's biggest producer of natural rubber, said their high offer prices may drive customers to Malaysia and Indonesia over the next few weeks.

China and Japan bought modest amounts of Thai rubber last week, but prices in other origins were more attractive, dealers said. Sales of lower grade smoked sheet rubber were also depressed due to the virtual absence of China in the market.

"Unless the prices dip from current levels, I don't expect to see active buying interest near-term." said one Bangkok-based trader. "Buyers are likely to go elsewhere."

The Thai benchmark RSS3 grade rubber was quoted around 116.00 U.S. cents a kg for July shipment and at 116.50 cents for August shipment.

Dealers in Singapore, however, were cautious about any substantial move up in prices.

"The market may have a chance to move slightly higher, but the market doesn't really have a great deal of strength. Production is moving up after wintering and we don't really see a lot of fresh leads," one dealer said.

Indonesian dealers said the conclusion of the recent elections, which were marred by some of the worst violence in the country in three decades, should help sentiment after most of the trade stayed on the sidelines for most of the campaign.

"I think prices will edge up this week, with some demand coming in," one trader said. "With the elections out of the way, I think sentiment will improve."

Traders said SIR20 grade rubber offers were higher by an average of 0.25-0.50 cents at 48.50-49.00 U.S. cents/lb FOB Medan, 48.00 cents FOB Palembang and Padang, 48.25 cents FOB Surabaya, 47.75 cents FOB Jambi and 47.50 cents FOB Pontianak. In Malaysia, dealers said the expected shortcovering should help shore up prices this week.

"Domestic prices are considered cheap and consumers should be lured into the market for sheet and latex grades," a dealer said. "We have the raw materials if they (buyers) need them."

"Overseas latex demand is seen slackening, but the market will find interest from local glove and condom manufacturers," another dealer at a trading firm in Malaysia added.

The Malaysian benchmark June RSS1 grade rubber was quoted at 285 Malaysian cents a kg at the close of the market last Friday against the previous week's 278.50 cents, and June SMR 20 was seen at 266 cents against 264 cents.

"We feel that RSS 1 could reach 300 cents this week," a Malaysian trader said.