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.