Traders upbeat on Thai, Sumatran rubber prices
Traders upbeat on Thai, Sumatran rubber prices
SINGAPORE (Reuter): Southeast Asian traders said Thai and
Indonesian rubber prices appeared firm on an upward track and may
climb higher this week on supply worries, although Malaysian
prices could dip slightly on a technical correction.
Thai traders said raw material supply was improving as recent
heavy rains began to peter out, but exporters scrambling to fill
orders and local processors were competing for supplies.
But rains have returned to Indonesia's main rubber areas on
Sumatra island, where trader said reduced tapping is expected to
keep raw material supplies tight.
One senior dealer in Singapore said Sumatran production could
plunge by between 20 and 50 percent. Production from Sumatra's
Jambi alone could dip by as much as 50 percent as smallholders
take a break from tapping to harvest rice crops, he added.
But he said the dry speel in Kalimantan, the Indonesian
province on Borneo Island, has threatened to cut latex production
by 15 percent.
Based on weather and other factors, traders in Singapore said
the general market outlook could remain firm. "It looks quite
steady ... the general consensus is there may be a small
(downward) reaction before going forward again," said one.
Thai benchmark RSS3 firmed to around 150-151 U.S. cents a kg
for December-March shipment last week compared with around 141-
142 U.S. cents a week earlier, Thai traders said.
Japanese dealers and users were the main buyers last week and
they also began to buy TTR20 for the first time in several months
as prices in Indonesia, the main producer of tire grade, firmed
to match Thai prices, a trader said.
"The Japanese have returned to buy TTR 20," he added. "TTR20
has been quiet for around three months but now the price of
Indonesia's SIR20 has climbed to meet it." He said TTR20 was now
trading at around 140 cents while SIR20 was at around 139 cents.
In Indonesia, traders said SIR20 was traded around 62.00-64.00
U.S. cents a pound for most of the week in Medan and Palembang,
and prices were likely to remain steady this week.
Kuala Lumpur traders said Malaysian rubber prices could ease
slightly in a technical reaction to recent sharp gains. But they
added that prices could rebound higher because of prevailing wet
weather and speculation of fresh Chinese buying.
One dealer estimated that China bought more than 20,000 tons
of Malaysian, Indonesian and Thai rubber for prompt shipment two
weeks ago.
"But nobody knows what China is up to and how much it still
needs to buy for 1995," a Singapore trader said.
Meanwhile, key rubber producing nations meet in Singapore this
week to discuss the future of a global price-stabilization accord
and formulate ways to promote the industry but no major decisions
are expected, delegates said.
The annual assembly of the seven-member Association of Natural
Rubber Producing Countries (ANRPC) from November 1-2 will discuss
future rubber supply/demand and price direction but is unlikely
to consider any market measures.
The Singapore meeting is expected to be attended by senior
government and industry officials from Indonesia, India,
Malaysia, Papua New Guinea, Singapore, Sri Lanka and Thailand.
High on the agenda is the fate of a new International Natural
Rubber Agreement (INRA) to replace an existing pact which expires
on De.28 this year.
The agreement can only be succeeded by a new one if 75 percent
of world exporters and importers sign and ratify the pact which
they hammered out in February in Geneva.
"No producers and consumers have decided whether to sign and
ratify before the December 28 deadline," said A.F.S. Budiman, the
executive director of the Indonesian Rubber Association.