Unrelieved woes hits SE Asia rubber trade
Unrelieved woes hits SE Asia rubber trade
SINGAPORE (Reuter): Anemic regional currencies and the
daunting prospect Bangkok may sell-off its excess rubber stocks
will keep the rubber trade in Southeast Asia mired in a bearish
rut, traders said yesterday.
"Where's the good news? The market is teetering on a
precipice," a senior dealer for a commodity house in Singapore
told Reuters. "It looks very weak."
"The currency situation is unambiguously bearish. The
devaluation of the Thai baht unleashed a wave of selling. Now,
the Indonesians are very keen sellers" after the flotation of the
rupiah last week, he added.
The Malaysian ringgit has also taken a hit, completing the
headcount of currencies of the world's biggest natural rubber
producers which have been savaged by speculative attacks.
Combined with poor demand and fresh fears the Thai government
will be forced to sell some of its 70,000 tons in rubber stocks,
despite Bangkok's repeated denials it has any such plans,
regional prices are in for another rough week.
"We are not happy about this at all," a trader from Thailand
said. "I expect the price to move in a narrow range with a
downward bias this week."
"The market seems convinced that the government is considering
selling the stock. It could be just a matter of time," said a
trader in the Thai rubber center of Hat Yai.
A trader in Singapore said talk of Thai stock sales "will
haunt the market" this week.
"I'm sure they will eventually sell some of the stock and that
would be bad for the market," the dealer said.
Thai dealers said Michelin and Marubeni of Japan bought modest
amounts of RSS3 rubber last week, but China was absent.
The Thai benchmark RSS3 was indicated around 91.00-92.00 U.S.
cents a kg FOB Bangkok for October shipment and 93.50 cents for
January shipment on Friday.
In Indonesia, dealers moaned at the rupiah's troubles and
scrambled for buyers who have practically disappeared.
"This market has been very gloomy. First, demand was very
weak, and now the rupiah is in trouble. Buyers have anticipated
prices will decline," said one trader in Palembang, Sumatra.
"Dealers are taking a wait-and-see position to await further
developments in the currency market," said another trader. "We
expect to see a clearer picture on what the currency is going to
be this week. We also expect the market to be weak," he added.
Prices in Indonesia ended the week at 42.00 U.S. cents/lb FOB
Palembang for October shipment and at 42.25 cents FOB Medan.
Offer prices were quoted at 43.00 cents FOB Medan for November
shipment, 41.50 cents FOB Padang, Pontianak and Jambi for
September shipment and 42.00 cents FOB Surabaya.
Some traders said they believe buyers would enter the market
when prices drop to 40.00 U.S. cents.
"I think that...is a kind of resistance level in which buyers
will have no choice but to buy rubber," said one trader.
In Malaysia, traders said local prices were held hostage to
the volatility of the ringgit and the rupiah.
"We don't know what's happening with the ringgit or rupiah and
I don't think our clients know very much either," said a trader
in Kuala Lumpur.
He added: "Technically, the prices should adjust upwards this
week if the ringgit falls again. But then again it might not."
Another trader said Malaysian rubber was among the most
attractively priced in the region now after the recent fall of
the ringgit.
"We have had some steady buying in the last couple of weeks
from Australians and Koreans, among others," said the trader.
"The volumes aren't great but it shows we are competitive."
Traders said the lower the currency, the greater the
advantages were for Malaysian commodity exporters.
The benchmark RSS1 rubber for September buyer was priced at
250.50 Malaysian cents a kg at the close of the market last week,
a rise of three cents from the previous week. SMR20 for September
buyer was four cents higher at 250.
Trading houses were offering SMR 20 at 247 cents a kg, SMR CV
at 289 cents, SMR L at 272, SMR 5 at 262, SMR 10 at 248 and drum
latex at 190 cents.