SE Asian rubber prices may extend rally
SE Asian rubber prices may extend rally
SINGAPORE (Reuter): Southeast Asian rubber prices are expected to extend a post-holiday rally this week on dwindling supplies due to weather and other factors, traders said yesterday.
There were reports that raw material supplies in Thailand could have dipped by as much as 60 percent due to wintering -- when trees shed leaves and production declines.
"The perception is that supplies are dropping, that's why the price can hold," a Thai trader said. "It's a correct perception for the time being but we can't say for how long."
Regional markets were closed for most part of last week for Lunar New Year and Idul Fitri holidays, halting tapping in Indonesia, Malaysia and Thailand.
This further aggravated the supply situation with production in the midst of wintering, traders said.
Thai benchmark RSS3 rubber rose to around $1.65 a kg for April/May shipment on Monday, from $1.57 on Feb. 16.
Japanese traders were the main buyers last week with prices now too high for Chinese buyers, traders said. "Chinese buyers will not be interested in the current prices," one said.
Drum latex firmed to $1.35 a kg from at $1.30 on February 16 on tighter supplies, traders said.
The overall trend for Thai prices was still higher, traders said. "We might see a technical correction in Japan this week but overall the trend is still bullish," one trader said.
But traders in Singapore were less optimistic over Tokyo extending its bullish run.
"The Japanese market seems over-extending itself against the physical market," one international firm's trader said.
In Indonesia, traders said prices were expected to be steady this week as demand picks up after the holidays. But the upside could be capped by buyers shying away from the market if prices rose well above the 70 U.S. cent a lb level.
"I expect prices to be steady this week as buyers come back into the market after the holidays," one Medan dealer said.
Another dealer said he was cautiously optimistic of prices but added that sharp increases could give buyers cold feet.
"The buying has not been aggressive, so if prices go up too fast buyers might want to sit it out for a while," he said. "I have had no indication that buyers are short at the moment."
Tire-grade SIR20 was traded over the weekend at 71 cents in Medan and 70 cents in Palembang, South Sumatra.
Wet latex was around Rp 2,788 a kg, compared with Rp 2,500 on Feb. 16. One dealer said the higher prices were due to increases in sheet rubber values.
In Malaysia, dealers said consumer demand could remain sluggish until early next week.
They said some players and traders had gone on extended Lunar New Year holidays and were only expected to make a return to the market in early March.
Traders said prices were, however, beginning to strengthen from a tighter supply of raw materials due to no tapping activity during the long festive break and wintering.