SE Asian rubber prices seen steady to easier
SE Asian rubber prices seen steady to easier
SINGAPORE (Reuter): Southeast Asian rubber prices are seen steady to easier this week with the trade shrugging off news the International Natural Rubber Organization (INRO) is ready to intervene in the market, dealers said yesterday.
"We expect prices to stay the same this week because the market lacks fresh factors which can change the price trend, either upward or downward," a dealer in Indonesia said.
"We may still see more covering from Europe before the summer holidays and by local dealers," a dealer in Malaysia said, adding he expected some Far East enquiries on latex SMR grades for July and some forward shipments of rubber.
But dealers in Singapore and Thailand, the world's biggest producer of rubber, were not so optimistic and forecast that prices will probably slide this week.
"You've got to be a bit bearish. We're coming into the summer slowdown season. It's difficult to see a price increase before September or October," a senior trader for a commodity house in Singapore said.
News that INRO is ready to intervene in the market caused barely a ripple in the trade although Thai government officials welcomed the development because the move would help reduce pressure for Bangkok to support local producers.
"It is a good news even though there is no immediate impact right now," a senior Thai official said.
Thailand has been supporting rubber prices in the country and will spend one billion baht in its rubber intervention plan.
Rubber industry officials and dealers around the region were not overly excited about the INRO announcement.
"I wouldn't be too excited, at least not now. Even though the market is very bearish, we are still about US$200 per ton away from the intervention level," said a Bangkok-based trader.
"We used to be happy with such news. But the fact is that Indonesia produces tens of thousands of tons of rubber each month. We are always in doubt about how much rubber INRO can buy from us," a dealer in Indonesia said.
"We believe that INRO can only purchase at most 100 tons. It's so small," he added.
A dealer at a Malaysian plantation firm said INRO will not intervene immediately in the market.
"INRO cannot intervene now yet. INRO's five-day moving average price is still far way from INRO's "may-buy" or "must-buy" levels," a dealer at a plantation firm said.
"The market is bearish now and if prices continue to fall gradually to near his (INRO's buffer stock manager) levels, we will see what (will) happen then," he said.
Malaysian traders said their attention was also focused on tight supply in the local market with tappers increasingly looking elsewhere for work due to low rubber prices.
"They think the daily wage they obtain through tapping is not enough to support their lives," said one trader.
Rubber trading houses in Malaysia were also hoarding stocks in the hope that prices will begin firming up.
"Some London dealers are trying to buy forwards right until December but producers are not willing to sell at current low levels on expectation of higher prices in the later part of the year," a dealer in Malaysia said.
Trading activity around the region was thin, dealers said.
In Indonesia, traders said a deal was recently done at 46.50 U.S. cents/lb FOB Palembang for August shipment and at 47.25 cents FOB Medan. Offer prices were quoted at 46.50 cents FOB Padang and Surabaya and at 46.50 cents FOB Pontianak and Jambi.
Malaysia's benchmark July RSS1 buyer was seen at 282.50 Malaysian cents a kg at the close of the market last Friday against 284 cents the previous week and July SMR 20 buyer was at 258.50 cents against 263 cents.
The Thai benchmark RSS3 for August delivery was quoted at around 112.00 U.S. cents per kg FOB Bangkok against last week's 116.00 cents.