SE Asian rubber prices expected to bottom out

SE Asian rubber prices expected to bottom out

SINGAPORE (Reuter): Southeast Asian rubber prices will probably remain mixed this week as most dealers feel prices will try to find their bottom, regional traders said yesterday.

Singapore-based rubber dealers fear there may still be some downside in prices due to seasonally weak demand.

"It might drift lower because the major buyers are still not in. With the summer doldrums already upon us it's not going to be a friendly market," one Singaporean rubber trader said.

Rubber prices in Indonesia will probably be mixed with sellers seen holding firm and resisting pressure to push prices down some more, dealers said.

"Foreign firms have tried to push prices down to 54.25-54.50 (U.S.) cents in Medan and Palembang over the past five days, but they did not succeed. Neither would they succeed in the coming days," one dealer in Medan in Indonesia said.

A dealer in Jakarta said, however, that prices may trend lower due to continued weak demand although any possible falls look limited.

"Prices are not likely to fall to 54.00 cents in Medan, but I am not sure whether Palembang sellers can hold firm to their offer prices as they usually (are) the first who succumb to pressure," the Jakarta-based dealer said.

Another Singaporean-based rubber trader said the market remained vulnerable because of steady falls in prices in Japan and weak consumer buying.

"You get nibbles here and there, but the big buyers are staying away probably until mid-August. The result is a real weak market," a dealer said.

SIR20 offer prices are likely to be between 54.75-55.25 U.S. cents/lb fob Medan for August/September deliveries, at 54.50- 55.00 cents/lb fob Palembang, Padang and Surabaya and between 54.50.00-54.75 fob Jambi and Pontianak, they said.

Dealers said sentiment in Indonesian latex was likely to remain weak on market talk of some Indonesian firms were buying latex in Thailand where prices were considered to be lower.

High amoniac grade latex, with 60 percent dry rubber content, was last traded at Rp 2,425/kg, down from Rp 2,450 the previous week in Bandung and Tangerang, dealers said.

Malaysian rubber prices will continue their downtrend this week with sentiment soft amid uncertainty over the direction of prices. The market will remain in this mood unless fresh Asian buying appears to reverse the market mood, local dealers said.

"Prices will lose further ground if there's no keen demand, particularly from Asia," one Malaysian dealer said, adding that only China currently appeared to have real unfilled demand.

"We expect the Chinese to continue inquiring for more rubber from Malaysia, Thailand and Indonesia. Prices in Malaysia are much cheaper, and they should be in here (Malaysia) to buy as the market believe that China needs more raw materials."

"We can forget about active demand from Europe. Most of its buyers are away for the summer vacations," a dealer at a Malaysian trading house said. "If some Europeans are in the market, they are just covering their positions."

"Some end-users for latex may be coming into the market for nearby shipment," another dealer said. Drum latex is hovering at around 260 Malaysian cents.

At the market's close on Friday Malaysia benchmark, August RSS1 buyers were quoted at 330.50 Malaysian cents a kg against 339 cents a week ago, and Aug SMR 20 buyer at 302.50 cents against 300.

Only Thai producers were upbeat despite the seasonal gloom.

"The market has been moving lower, it's generally a weak market, but I think there's some support at this level," one trader said.

Thai benchmark RSS-3 for August shipment eased to around US$1.25/kg FOB Bangkok from $1.27-1.28 the week before.

"Japanese buyers are now keen to buy forward, they also perceive that the market has now come down enough," the trader said.