SE Asian rubber trade frustrated by flat demand

SE Asian rubber trade frustrated by flat demand

SINGAPORE (Reuter): Flat global demand for rubber will continue to weigh on Southeast Asian prices this week and the trend will not change unless major consumers step up their buying, regional traders said yesterday.

"The market has been dead for a while. Consumers are just not keen to come here," said one Malaysian trader.

"It's going to be very quiet and flat again this week. We're hoping that some buying comes in, but there's just not much going on," a dealer for a North American rubber trading company in Singapore said.

Traditionally large consumers like the United States, Japan, Europe and China have practically disappeared from the market.

"From what I've learned, both U.S. and European buyers are not making any fresh purchases because they have enough stock.

Usually, China enters the market this month for June and July shipment, but it has not shown up until now," said one trader in Indonesia.

The decision by Bangkok's Rubber Estate Organization last week to buy RSS3 rubber at 27.50 baht from the previous 25.00 baht was shrugged off by the trade.

Some traders said they believed buyers had shifted their attention to Thailand because prices were lower there, but Thai dealers also complained about soft consumer buying.

The only bullish news in Thailand last week was a deal to sell 20,000 tons of rubber to the Netherlands at US$1,260 a ton on an FOB basis, official and trade sources said.

Under the deal, Thailand will in turn buy up to 500,000 tons of fertilizer from the Netherlands.

The amount of rubber entering the Thai market this week dropped around 20 percent to 125,123 kg, trade sources said. Thai benchmark RSS3 for April delivery was quoted around 122.00- 122.50 U.S. cents a kg FOB Bangkok while concentrated latex was quoted around 94 cents a kg.

Indonesian traders, on the other hand, said tire-grade SIR20 for April/May shipment was unchanged at 52.75 U.S. cents a lb FOB Medan and Surabaya, at 52.50 cents FOB Palembang and Jambi, and at 52.00 cents FOB Pontianak.

Offer prices were heard at 53.00 cents a lb FOB Padang, but no deals were reported.

Indonesian dealers said they expected to sell at the 53.00 cents a lb level when buyers begin showing up in the market.

"We can only hope the price will stay the way it is this week because it is hard to make predictions in this kind of situation," said one Indonesian-based trader.

In Malaysia, rubber prices will probably move in a narrow band this week with a lack of consumer demand continuing to limit the market's upside, traders said.

Lower prices in Thailand and Indonesia have also pulled buyers away from Malaysia, the dealers said.

Producers in Malaysia are in no hurry to sell in anticipation of tighter supplies due to the current wintering period, they added.