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.