Slow trade will subdue SE Asian rubber prices
Slow trade will subdue SE Asian rubber prices
SINGAPORE (Reuter): Slack demand and abundant supplies will keep the Southeast Asian rubber market subdued this week, regional traders said yesterday.
The absence of major offtake from China and the seasonal summer slump as buyers in Europe and the United States go on holiday will continue to depress prices, they said.
"The bears are ruling the roost because offtake from the major buyers remained non-existent. There's no news out there which may be able to lift prices," a Singapore-based rubber trader said.
"There's quite a lot of raw material around, enough to meet nearby shipments to Japan," one Thai trader explained.
Rains slightly affected tapping on the west coast in the Phuket and Trang areas, but supplies remained plentiful, traders said.
Thai benchmark RSS-3 for October shipment eased slightly to US$1.25/kg-$1.26/kg FOB Bangkok on Friday, compared with around $1.26/kg last week, the traders said.
"Farmers and dealers are holding onto supplies. They think prices are low enough and there's no incentive to sell," one trader said.
Some Chinese buyers were in the market, but the extent of their purchases was not clear, they said.
"I've head the Chinese are asking for rubber but I didn't hear of any trading," one trader said.
"The Chinese seem to be quite active if they get the right price, but it's difficult to say just how much they're buying," another trader said.
Malaysian traders said they felt the presence of the Chinese remained minimal since they appear to have ample stocks after recent shortcovering.
Traders said prices were likely to remain under pressure in the absence of keen consumer interest and ample stocks of raw materials in the market.
The benchmark RSS-1 closed on Friday at 323.5 Malaysian cents a kg while the SMR20 ended at 302 cents a kg.
Dealers said they expect RSS1 to trade in the 322-323 cent range and the SMR20 at 301-302 cents.
The Malaysian Metereological Services Department said it expected a rainy week after more than a fortnight of fine weather.
"The rain could cut production and stocks a bit, but I don't think (it will be) enough to help trigger a rebound," said a dealer. "Certainly, I don't see buyers becoming active again."
In Indonesia, SIR20 prices are seen generally stable this week amid signs of likely lower supply in some rubber producing regions, dealers said.
"Demand is likely to stay weak but I think the worst is over now," one dealer in Jakarta said.
"The weak demand is unlikely to push prices much lower as prices have already reached bottom and there are signs of lower supply in some key rubber regions," another dealer in the North Sumatra capital city of Medan said.
Dealers said SIR20 offer prices for October deliveries will stay in a range between 54.75-55.25 U.S. cents/lb FOB Medan, 54.00-54.50 cents FOB Palembang, Surabaya and Padang, and at 53.50-54.00 cents FOB Jambi and Pontianak.
One latex dealer in Medan said he had signed deals to sell all his August deliveries latex to local firms as selling it in the domestic market was more profitable than exporting it.
"There is talk of some local firms preferring to buy latex from Thailand, but the buying is likely to have little impact on the local market as many still prefer to buy locally," the latex dealer said.
High ammoniac grade latex, with 60 percent dry rubber content, was seen generally on offer at Rp 2,450/kg in Medan and Rp 2,425 in the western Javanese towns of Bandung and Tangerang, dealers said.
Bulk latex in Malaysia eased to 90-92 U.S. cents/pound from 93 U.S. cents/pound last week on good supplies, a trader there said.