Southeast Asian rubber outlook gloomy
Southeast Asian rubber outlook gloomy
SINGAPORE (Reuter): The Southeast Asian rubber business is in for another gloomy week, with ample supplies and soft demand keeping prices on the defensive, dealers said yesterday.
"There's plenty of rubber around. We're at peak production. Fundamentally, it's still a bearish market," said a dealer for a commodity house in Singapore.
Dealers in Thailand, Indonesia and Malaysia said demand remained poor with producers looking for any kind of leads in the market.
"We are going to experience another bearish market this week. There is no direction at all and the market desperately needs some incentives to boost sentiment," a trader in Indonesia said.
"I think we'll see a decline of between four to six (Malaysian) cents this week as there really doesn't seem to be any buying interest," said a rubber trader in Kuala Lumpur.
Floods last month in Thailand, the world's biggest producer of natural rubber, have abated and supplies are seen rising.
"I guess tapping activities will resume at normal pace in many places that were inundated late last month," a trader in Thailand said.
The unsettled state of regional currency markets will continue to dog the rubber trade.
"There's a bit of competition over prices due to the weakening of the Indonesian rupiah and Thai baht along with the (Malaysian) ringgit," a dealer in Malaysia said.
"The currency situation has not stabilized yet. With too much rubber on nearby months, the outlook is not rosy," a trader in Singapore for a foreign rubber house added.
Indonesian dealers said that with demand so poor, producers were comfortable selling rubber at whatever level they can find. Malaysian producers are quoting their key SMR20 rubber around three Malaysian cents lower than those from their competitors in Indonesia in an attempt to attract buyers.
"This kind of approach seems to make sense in the wake of the fluctuation in the rupiah," a trader in Indonesia said.
"Traders seem to be selling rubber at their own prices. There does not seem to be any particular trend that traders can follow," another dealer said.
Traders said the Thai benchmark RSS3 for October shipment was quoted around 85.00-86.00 U.S. cents a kg FOB Bangkok while January/February was quoted around 92.00-93.00 cents/kg on the same basis.
In Indonesia, dealers said offer prices were quoted at 40.25 cents a kg FOB Palembang, 40.50 cents FOB Padang and Surabaya and 40.00 cents FOB Pontianak and Jambi, all for December shipment.
The Malaysian Rubber Exchange and Licensing Board quoted the benchmark RSS1 buyer for October shipment at 256.50 Malaysian cents a kg, down 6.5 cents from a week ago, at the close of trade last Friday.
The SMR20 rubber for October buyer was quoted four Malaysian cents down at 257 cents a kg.