SE Asian rubber prices to fall on weak demand

SE Asian rubber prices to fall on weak demand

SINGAPORE (Reuter): Southeast Asian rubber prices will soften further this week on the back of soft demand with most major buyers out for summer holidays, traders said yesterday.

"This is really a bad time. Prices could fall further if the weak demand continues," said an Indonesian dealer in the north Sumatran city of Medan.

"The whole situation just doesn't look good. Prices may come off some more before we see the bottom," a Singapore trader said.

An Indonesian trader said some sellers had lowered their offer prices sharply by 1.50-2.50 U.S. cents/lb in various rubber producing regions of the country during the past week, but demand remained weak.

Dealers said offer prices for October deliveries were likely to fall further by 1.00-2.00 U.S. cents/lb to 53.50-54.50 U.S. cents/lb fob Medan, 53.00-53.75 cents fob in Palembang, Surabaya and Padang, and at 52.30 cents-53.00 fob in Jambi and Pontianak, dealers said.

They said market talk of rising supply in rubber producing countries in Southeast Asia, particularly in Palembang, was likely to further weaken sentiment.

Shoe-grade SIR3L will also probably remain weak. Dealers said SIR3L was last traded at 137 cents/kg late July. It was seen on offer at 134-135 cents/kg.

Latex was also seen staying weak. It is generally on offer in Medan at 2,450 rupiah/kg, but some were likely to offer it at 2,300 rupiah due to lackluster demand, dealers said.

Rubber prices in Malaysia may also slide further this week as regional production picks up and consumer demand slows down, dealers said.

Weather conditions in Malaysia, Thailand and Indonesia are also improving, boosting supply and putting further pressure on prices, the dealers said.

"Buyers are also staying away from Malaysia where prices are higher than levels in other producing countries," a trader said. "We only expect some enquiries from Asia like Taiwan, China and South Korea as Europeans dealers are mostly on their summer holidays."

The dealer added: "There is a surplus of raw material in the market and suppliers are trying to quote low prices to attract some foreign demand."

Drum latex prices are offered at around 250-255 Malaysian cents but interest remained slack.

The Malaysian benchmark September RSS1 was quoted at 326 cents a kg against 333 cents a week ago and September SMR 20 was at 305 cents against 307.50.

In Thailand, rubber prices fell back last week on lower prices in Tokyo and abundant supplies coming onto the market and will probably be easier this week, traders said.

Floods in parts of southern Thailand were not affecting supplies and tapping continued uninterrupted, traders said.

"The floods are so far only in the upper south, they're not affecting us yet," said a trader in Hat Yai. "We've had some fine weather over the last couple of day and tapping is continuing."

Traders said the floods were most severe in Chumpon and Ranong provinces and had not yet hit the main rubber growing areas in Surat Thani and Phangnga provinces.

"Up to now we're not affected. There's no flooding here. There's a lot of raw material on the market," a trader in Phuket said.

The Thai benchmark RSS-3 for September/October shipment eased to around US$1.26/kg FOB Bangkok on Friday from $1.33/kg the preceding week, the traders said.

Chinese buyers were making some small purchases, they said.

"There are some inquiries from the Chinese and some has been traded but not in big volume," one of the traders said.

Bulk latex was at 93 U.S. cents/lb, the same as last week on steady supplies, a trader said.

Prices were expected to remain steady next week unless the weather took a turn for the worse.

"I expect another quiet week unless we get heavy rains and flooding," a trader said.